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144Digitalization Among Factors Pushing Millennial Credit Preferences Toward Auto and Personal Loans http://newsroom.transunion.com/digitalization-among-factors-pushing-millennial-credit-preferences-toward-auto-and-personal-loans/
http://newsroom.transunion.com/digitalization-among-factors-pushing-millennial-credit-preferences-toward-auto-and-personal-loans/New TransUnion study explores Millennial and Generation X credit dynamicsAs the first generation to be fully immersed in mass-market digitalization, Millennials are slowing their credit card usage while increasingly using other credit products such as personal loans. A just-released TransUnion (NYSE: TRU) study found that Millennials are carrying on average two fewer bankcards and private label cards than Generation X (“Gen X”) consumers at the same respective ages. Conversely, Millennials’ appetite for new auto and personal loans has grown at a faster rate than Gen X borrowers at the same age points.

“Younger consumers present substantial growth opportunities for lenders during their lifecycle, and it’s imperative to understand their credit preferences now to build strong, long-lasting relationships going forward,” said Ezra Becker, senior vice president and head of TransUnion’s global research and consulting group. “Millennials, in particular, offer new challenges to lenders, as they are the first group to truly begin their adult lives in the digital age. While Gen Z consumers are only just beginning their credit journey, many Millennials are now reaching a stage of life where they will be making larger, more significant purchases.”

TransUnion’s study compared the Millennial (born 1980-1994) and Gen X (born 1965-1979) generations because they represent more than half of the overall buying power in the United States (as measured by income distribution). “Younger borrowers offer lenders more growth opportunities in the future, as the largest volume of loan originations occur the decade after consumers turn 40 years of age – a time when many consumers are near their peak earnings,” said Becker.

Credit Cards Out of Fashion; Cars and Personal Loans in Style

The study found that, in addition to carrying fewer credit cards than Gen X consumers, Millennials also are maintaining lower balances on those cards. TransUnion analysts believe that this is partly driven by the CARD Act of 2009, which limited the marketing of credit cards on college campuses. The increased use of debit cards also plays a role in this shift. The study pointed to recent Federal Reserve data, which found that debit card transactions grew from 8 billion in 2000 to 60 billion in 2015. In contrast, credit card transactions only increased from 16 billion to 34 billion in that same timeframe.

“While many Millennials still use credit cards, it’s understandable to see fewer 20-somethings today possessing and using credit cards when we take into account the regulatory environment, the popularity of debit cards, the ease of online loan origination, and other salient factors,” added Becker.

TransUnion’s study evaluated credit origination trends over twelve months (2015 for Millennials and 2001 for Gen X) for both generations at the same ages between 21 and 34. The study found that Millennials are opening new auto loans and personal loans at a higher rate. Millennials opened new auto loans between the ages 21-34 at a 21% higher rate than Gen X borrowers. Millennials also opened far more personal loans than Gen X – nearly double the rate.

Millennials v. Gen X – Comparing Generations During the Same Age Period (21-34)

Credit Product

Origination Rate(Gen X 21- 34)

Origination Rate (Millennials 21- 34)

Percent Difference Between Millennial Borrowers Opening Loans Between Ages 21-34 Compared to Gen X at the Same Age

Auto Loans or Leases

12.09%

14.58%

+21%

Bank-Issued Credit Cards

25.07%

19.50%

-22%

Private Label Credit Cards

17.05%

15.28%

-10%

Personal Loans

2.18%

4.33%

+98%

Mortgages

9.72%

5.16%

-47%

“Our study clearly shows that Millennials exhibit different preferences for credit products than Gen X’ers did at the same age,” said Nidhi Verma, co-author of the study and vice president in TransUnion’s innovative solutions group. “While credit cards are not as popular with Millennials as they were with previous generations, purchasing or leasing an auto is clearly important to them. Digitalization allows consumers of all ages to more easily ‘shop around’ for vehicles, making the process less onerous. This is the market Millennials have grown up in, and the one in which they most naturally operate. In particular, the influx of FinTechs into the personal loan space appears to have resonated as an attractive lending channel for Millennials growing up in the digital age.”

Millennials and Mortgages

Among all major credit products, the mortgage market has been the slowest to recover from the Great Recession, with home ownership rates still below levels observed in 2009. Overall, homeownership is down 0.8% since the Recession, but this number grows to -1.6% for 35-44 year olds and -2.1% for those under 35.

As a result of credit access being limited and, per the U.S. Census Bureau, affordability being affected by income gaps between the two generations, TransUnion’s study found the percentage of Millennials opening mortgages between the ages of 21-34 (5%) is nearly half of the Gen X group (10%) when they were that age. TransUnion observed a smaller but still material gap (13% for Millennials vs. 16% for Gen X) within the Super Prime risk tier, suggesting that this dynamic is not driven solely by credit supply. “The mortgage market during most of the last five to seven years has been a difficult one for Millennials because of a challenging labor market for that age group, combined with stricter underwriting post-recession,” said Verma.

TransUnion’s study found that access to mortgages has declined dramatically for 21-34 year olds. In 2000, 39% of mortgage originations in this age range were comprised of non-prime borrowers. In 2016, non-prime borrower originations declined to 20%.

Further impacting mortgage originations to Millennials are lower income levels. Per the U.S. Census Bureau, median household income of consumers ages 25-34 declined from $60k in 2000 to $57k in 2015. The impact can be seen in the housing status of these consumers: a larger portion of younger adults ages 25-29 are living with their parents, rising from 15% in 2000 to 25% in 2014.

Despite these challenges, a TransUnion survey of 1,340 consumers in July 2017 found that nearly 75% of Millennials ages 23-37 said they plan on purchasing a home in the future. “Millennials clearly are interested in home ownership, and we think their appetite to secure a mortgage loan will increase as their incomes rise,” added Verma.

For more detailed information about TransUnion’s Millennial study, please visit our study landing page. Additional information on establishing a positive credit history can be found here.

About the TransUnion Millennial Study

TransUnion’s study was based on anonymized consumer credit data. The segments of Millennials and Generation X were created by looking at consumers age 21 to 34 for each generation. At the end of 2000, we found 36 million Gen X consumers in this age range. Comparatively, there were 60 million Millennials in this age group at the end of 2014. To measure the difference in credit participation, origination and performance, consumers were studied by age, VantageScore® 3.0 credit score risk tier and wallet profile for each generation.

Since there were more Millennials than Gen X consumers available for this study, and more Millennials were in the riskier credit tiers than Gen X, we controlled for both age and risk effects using a statistical methodology known as stratified random sampling.

For each age group and credit tier, we sampled the Millennial population, so the number of consumers would be roughly equal to the Gen X population

Each age group and credit tier represents the same proportion of the respective generation for both generations

About TransUnion (NYSE:TRU)

Information is a powerful thing. At TransUnion, we realize that. We are dedicated to finding innovative ways information can be used to help individuals make better and smarter decisions. We help uncover unique stories, trends and insights behind each data point, using historical information as well as alternative data sources. This allows a variety of markets and businesses to better manage risk and consumers to better manage their credit, personal information and identity. Today, TransUnion has a global presence in more than 30 countries and a leading presence in several international markets across North America, Africa, Latin America and Asia. Through the power of information, TransUnion is working to build stronger economies and families and safer communities worldwide. www.transunion.com/business

]]>TransUnion,mortgage,credit card,auto,personal loansWed, 30 Aug 2017 05:01:00 -0500Consumer Access to Credit Cards Grows to Highest Level since 2005 as Mix of Card Issuers Changeshttp://newsroom.transunion.com/consumer-access-to-credit-cards-grows-to-highest-level-since-2005-as-mix-of-card-issuers-changes/
http://newsroom.transunion.com/consumer-access-to-credit-cards-grows-to-highest-level-since-2005-as-mix-of-card-issuers-changes/TransUnion report reveals consumer credit scores have risen and the mortgage market is recovering at a faster pace than anticipatedThe number of consumers with access to a credit card at the end of Q1 2017 reached the highest level since 2005, according to TransUnion’s (NYSE:TRU) Q1 2017 Industry Insights Report. The report, powered by PramaSM analytics, was released today at Card Forum, a leading conference for card and payment executives.

In Q1 2017, over 171 million consumers had access to a bankcard, the highest level TransUnion has observed since 2005. Of these, 16.33 million were subprime consumers, an additional 2.32 million consumers from just two years prior in the first quarter of 2015. The growth rate for subprime consumers was 8.9% in Q1, twice the rate of an average of 2.6% for all other risk tiers. The growth in access contributed to a 7.4% increase in total bankcard balances, which reached $693 billion in Q1 2017.

Number of Consumers with Access to a Bankcard Continues to Rise

Q1 2005

Q1 2010

Q1 2015

Q1 2017

162.49 million

149.59 million

160.61 million

171.38 million

With a focus on affluent programs, average total credit lines have increased for super prime consumers. The average total credit line for super prime consumers rose from $29,176 in Q1 2010 to $33,371 in the first quarter of 2017. At the same time, lenders have decreased total credit lines extended to consumers at the other end of the credit spectrum.

“Lenders have taken a cautious approach to re-entering subprime card lending by keeping credit lines lower,” added Siegfried. “The recent surge in subprime cards has contributed to an increase in the card delinquency rate at the start of the year, but from a pre-recession, historical perspective, we are still at low levels of delinquency.”

Average Total Credit Lines Rise for Super Prime Consumersas Lenders Compete for Least Risky Group

Risk Tier

Change in Average Credit Linesince Q1 2010

Super prime

+$4,195

Prime plus

+$146

Prime

($967)

Near prime

($651)

Subprime

($1,069)

Though the subprime card market has grown, consumer credit scores have improved over time, and consumers have become more credit-active across major products. In Q1 2017, 58% of consumers had a VantageScore® 3.0 risk score of prime or better, up from 57% of consumers in 2016. In the same quarter in 2010, just 51% of consumers were prime or better.

The 90-day+ consumer-level credit card delinquency rate increased from 1.50% in Q1 2016 to 1.69% in Q1 2017. This is elevated from the Q1 delinquency average of 1.51% observed between 2013 and 2017 and has been anticipated since subprime access began expanding in 2014.

Trends in the Credit Card Market

Credit Card Metric

Q1 2017

Q1 2016

Q1 2015

Q1 2014

Delinquency Rate (90+ DPD) Per Borrower

1.69%

1.50%

1.34%

1.50%

Average Debt Per Borrower

$5,332

$5,193

$5,144

$5,162

Prior Quarter Originations*

16.00 million

16.71 million

14.52 million

13.53 million

*Note: Originations are viewed one quarter in arrears to account for reporting lag.

In 2010, just 55 lenders issued more than 10,000 originations annually, but this number rose to 86 issuers by the end of 2016. The top 10 bankcard issuers have seen their share of the market decline from 87% of card balances in 2010 to 81% of balances in 2017.

Mortgage Originations Grew to Highest Levels since 2012

The mortgage delinquency rate declined 11.9% at the beginning of the year, dropping to 2.07% in Q1 2017 from 2.35% in Q1 2016. The mortgage delinquency rate has continued its steady decline for 15 straight quarters.

At the end of 2016, mortgage originations, viewed one quarter in arrears, grew to 2.08 million, the highest fourth quarter level since 2012. Originations grew 28.6%, up from 1.62 million in the fourth quarter of 2015. The majority of originations (85.6%) were to consumers in the prime or better risk tiers, with the largest concentration of borrowers in the super prime risk tier (32.7%).

“At the end of the year, only 14.4% of originations were to nonprime consumers,” said Mellman. “As the market stabilizes, mortgage lenders are well-positioned to take advantage of trended and alternative data to better evaluate the riskiness of nonprime consumers.”

Trends in the Mortgage Market

Mortgage Lending Metric

Q1 2017

Q1 2016

Q1 2015

Q1 2014

Delinquency Rate (60+ DPD) per Borrower

2.07%

2.35%

3.06%

4.10%

Average Debt Per Borrower

$196,772

$191,927

$187,153

$188,628

Prior Quarter Originations*

2.08 million

1.62 million

1.42 million

1.37 million

*Note: Originations are viewed one quarter in arrears to account for reporting lag.

Auto Delinquency Ticks Up as Lenders Pull Back on Subprime Originations

The latest Industry Insights Report found that auto loan balances continued to grow at a more moderate pace in the first quarter of 2017. Total auto balances reached $1.12 trillion, up from $1.05 trillion in Q1 2016. The year-over-year growth rate in Q1 2017 was 7.3%, the lowest level TransUnion has observed since Q2 2012.

The average auto balance per consumer rose to $18,386, up 1.8% from $18,065. The auto loan delinquency rate increased from 1.16% in Q1 2016 to 1.30% in Q1 2017, driven by poorer loan performance in the subprime and near prime segments.

Auto originations, viewed one quarter in arrears, declined to 6.66 million to end 2016, down 0.2% relative to Q4 2015. This marks the second consecutive quarter in which total originations were down year over year. Subprime originations had the steepest decline in originations, declining 5%.

Trends in the Auto Market

Auto Lending Metric

Q1 2017

Q1 2016

Q1 2015

Q1 2014

Delinquency Rate (60+ DPD) Per Borrower

1.30%

1.16%

1.02%

1.10%

Average Debt Per Borrower

$18,386

$18,065

$17,512

$16,894

Prior Quarter Originations*

6.66 million

6.67 million

6.32 million

5.88 million

*Note: Originations are viewed one quarter in arrears to account for reporting lag.

Personal Loan Balances Grow While Subprime Originations Slow

The total balance for unsecured personal loans grew 9.7% to $102 billion in Q1 2017. One year prior, personal loan balances were $93 million. The year-over-year growth rate slowed compared to prior first quarters, when the yearly growth rate averaged 19.9% between 2013 and 2016.

The average personal loan balance was $7,603 in the first quarter, a slight increase from $7,544 in Q1 2016. In the last five years, personal loan balances have grown by $1,709 from $5,893 in Q1 2012.

At the end of 2016, personal loan originations, viewed one quarter in arrears, declined 10.8% from 4.10 million in Q1 2016 to 3.66 million in Q1 2017. Subprime (down 12.6%) and near prime (down 13.5%) originations experienced the sharpest year-over-year drops in originations.

The personal loan delinquency rate also ticked up slightly to open 2017. The delinquency rate was 3.72%, a 3.6% increase from 3.59%.

Trends in the Unsecured Personal Loan Market

Unsecured Personal Loan Metric

Q1 2017

Q1 2016

Q1 2015

Q1 2014

Delinquency Rate (60+ DPD) Per Borrower

3.72%

3.59%

3.62%

3.95%

Average Debt Per Borrower

$7,603

$7,544

$6,876

$6,315

Prior Quarter Originations*

3.66 million

4.10 million

3.85 million

3.27 million

*Note: Originations are viewed one quarter in arrears to account for reporting lag.

]]>mortgage,credit card,IIR,auto,personal loansTue, 09 May 2017 05:00:00 -0500Nearly 12 Million Consumers Gained Access to Credit Products Including Auto, Credit Card and Personal Loans in 2016 http://newsroom.transunion.com/nearly-12-million-consumers-gained-access-to-credit-products-including-auto-credit-card-and-personal-loans-in-2016/
http://newsroom.transunion.com/nearly-12-million-consumers-gained-access-to-credit-products-including-auto-credit-card-and-personal-loans-in-2016/TransUnion report finds personal loans continued to grow in popularity; Baby boomers make up largest share of consumers with a personal loan in 2016Auto loans, credit cards and personal loans reached new milestones in 2016 as the number of consumers with access to these products continued to grow, according to TransUnion’s (NYSE:TRU) Q4 2016 Industry Insights Report. The report, powered by PramaSM analytics, found that balances rose across all credit products by year-end.

Personal loans reached a new milestone at the conclusion of 2016, with total balances topping $100 billion for the first time ever. While younger consumers have played a major role in the growth of these lending products, TransUnion’s Q4 2016 Industry Insights Report confirmed that, contrary to popular belief, mature borrowers are leading the charge on these loans. “Personal loans continued to grow in originations and balances, and we expect this to remain a popular product for all consumers in 2017,” added Verma.

Baby boomers comprised 32.8% of all consumers with a personal loan at year-end 2016, followed by Gen X (31.6%) and millennials (26.6%). In Q4 2013, millennials comprised just 23.5% of personal loan users, but their share grew over the past three years to reach 26.6% at the end of 2016.

Consumers with a Personal Loan by Generation

Generation

Percentage of consumers with a personal loan – Q4 2016

Percentage of consumers with a personal loan – Q4 2013

Gen Z (1995 and younger)

1.6%

0.02%

Millennial (1980-1994)

26.6%

23.5%

Gen X (1965-1979)

31.6%

31.4%

Baby boomer (1946-1964)

32.8%

36.2%

Silent (1945 and older)

7.3%

8.8%

Total personal loan balances grew $14 billion between year-end 2015 and year-end 2016, reaching $102 billion. The number of consumers with a personal loan continued to climb steadily and ended 2016 at the highest level since at least Q3 2009. In Q4 2016, 15.82 million consumers had a personal loan.

With fewer millennials comprising the FinTech space than expected, TransUnion explored where they may be shopping for loans. The study found that credit unions are seeing membership growth with the millennial generation. As of Q4 2016, of all consumers with a FinTech personal loan, just 26.3% were millennials, compared to 30% of credit unions’ personal loan customers. The average credit union personal loan was originated at $5,216, compared to $8,051 for FinTech personal loans. Banks originated the largest personal loans at $11,290.

“The distribution of millennial consumers across lender types represents a healthy, competitive market,” said Laky. “Likely due to their strong relationships with members, credit unions have a slightly larger share of millennial personal loan borrowers, but our data show that they originate smaller loans than FinTechs and other lenders.”

Personal Loan Lenders’ Share of Millennial Generation

Lender Type

Percentage of customer base in Millennial Generation

Average Loan Size for All Generations

Bank

26.1%

$11,290

Credit union

30.0%

$5,216

FinTech

26.3%

$8,051

Finance company

24.3%

$2,885

The personal loan delinquency rate was 3.83% in Q4 2016, the highest Q4 reading since 2013 and up from 3.62% in Q4 2015. Originations, viewed one quarter in arrears, declined for the second consecutive quarter. Originations dropped 5.7% from 3.75 million in Q3 2015 to 3.54 million in Q3 2016. “We’ve observed a decline in non-prime lending that we attribute to mid-year FinTech funding challenges and regulatory uncertainty in advance of the election,” added Laky. “We believe that the personal loan market is stabilizing, and have seen balances grow across risk tiers through the end of the year.”

Trends in the Unsecured Personal Loan Market

Unsecured Personal Loan Metric

Q4 2016

Q4 2015

Q4 2014

Q4 2013

Delinquency Rate (60+ DPD) Per Borrower

3.83%

3.62%

3.73%

4.01%

Average Debt Per Borrower

$7,640

$7,360

$6,741

$6,247

Prior Quarter Originations*

3.54 million

3.75 million

3.35 million

3.26 million

*Note: Originations are viewed one quarter in arrears to account for reporting lag.

Mortgage Delinquency Rate Stabilizes in Q4 2016

While mortgage delinquencies continued to decline in 2016, signs of plateauing are now evident. The mortgage delinquency rate concluded 2016 at 2.28%, and has now declined every quarter on a quarter-over-quarter basis since Q3 2013. While the delinquency rate dropped 7.3% in the last year, it remained nearly unchanged from Q2 2016 (2.30%) and Q3 2016 (2.29%).

Mortgage originations, viewed one quarter in arrears, reached 2.23 million in the third quarter of 2016. A growth rate of 19.0% year-over-year propelled mortgage originations to the highest level since they reached 2.32 million in Q2 2013. The average mortgage balance also reached a post-Recession high of $194,415 in Q4 2016.

“Originations have continued to grow across all risk tiers, which suggests lenders may be warming up to originating mortgages to non-prime borrowers, even though that share of the market remains small at under 4%. In the third quarter, mortgage originations surpassed two million originations for the first time in three years, as borrowers continued to take advantage of low interest rates and as economic indicators point to a well-performing economy with low unemployment and wage growth,” said Mellman. “Throughout 2017, we will monitor whether the rise in interest rates impacts mortgage market growth.”

Trends in the Mortgage Market

Mortgage Lending Metric

Q4 2016

Q4 2015

Q4 2014

Q4 2013

Delinquency Rate (60+ DPD) per Borrower

2.28%

2.46%

3.40%

4.31%

Average Debt Per Borrower

$194,415

$189,914

$187,311

$187,228

Prior Quarter Originations*

2.23 million

1.87 million

1.51 million

1.82 million

*Note: Originations are viewed one quarter in arrears to account for reporting lag.

Consumers with an Auto Loan Reach Highest Levels since 2009

The latest Industry Insights Report found that 80 million consumers had an auto lease or loan as of year-end 2016. This marks the highest level TransUnion has observed since at least Q3 2009, as approximately 4.3 million additional consumers took out an auto lease or loan in 2016.

Total auto loan balances continued to grow at the end of 2016, closing the year at $1.11 trillion. The total balance grew 8.3% during 2016, slower than the average growth rate of 11.0% between 2013 and 2015. The average auto balance per consumer also rose slightly to $18,391, up from $18,004 in Q4 2015.

Auto originations declined 0.8% to 7.46 million in Q3 2016, down from 7.52 million in Q3 2015. Subprime originations experienced the largest decline (-3.2%), and prime plus (+1.8%) and super prime (+1.7%) originations grew in the third quarter of 2016.

The auto delinquency rate reached 1.44% to close 2016, a 13.4% increase from 1.27% in Q4 2015. Auto delinquency is at its highest level since the Q4 2009 reading of 1.59%.

Trends in the Auto Market

Auto Lending Metric

Q4 2016

Q4 2015

Q4 2014

Q4 2013

Delinquency Rate (60+ DPD) Per Borrower

1.44%

1.27%

1.19%

1.23%

Average Debt Per Borrower

$18,391

$18,004

$17,456

$16,781

Prior Quarter Originations*

7.46 million

7.52 million

7.01 million

6.58 million

*Note: Originations are viewed one quarter in arrears to account for reporting lag.

Total Credit Card Balances Reach $717 Billion at the End of 2016

TransUnion found that the number of consumers with a credit card balance rose 4.4% in Q4 2016 to 139.2 million, the highest level since 2009. Total credit card balances are also at their highest levels since Q3 2009. The largest growth in credit card balances came from the subprime risk tier, where balances rose 10.8% between Q4 2015 and Q4 2016.

In addition, the average card balance per consumer grew 2.8% to $5,486, up from $5,337 at year-end 2015 and the highest level since $5,609 in Q4 2010.

Originations, viewed one quarter in arrears, grew 14.1% to 17.52 million in Q3 2016, up from 15.36 million in Q3 2015. Subprime originations grew at 8.6% year-over-year in the third quarter of 2016, compared to an average third quarter growth rate of 26.8% from 2013 to 2015.

The credit card delinquency rate reached 1.79% in Q4 2016, an increase of 12.6% from 1.59% in Q4 2015. This marks the highest Q4 delinquency reading since Q4 2011, when the delinquency rate reached 1.90%. The credit card delinquency rate remains more than a full point below its peak in Q4 2009 (2.97%).

“Card delinquencies experienced a deterioration in the fourth quarter of 2016 as lenders’ subprime portfolios matured and energy-dependent states experienced ongoing challenges,” added Siegfried. “However, we observed a significant slowdown of originations to subprime consumers, which could signal lenders are evaluating their risk management strategies in light of the rising delinquency rate.”

Trends in the Credit Card Market

Credit Card Metric

Q4 2016

Q4 2015

Q4 2014

Q4 2013

Delinquency Rate (90+ DPD) Per Borrower

1.79%

1.59%

1.48%

1.60%

Average Debt Per Borrower

$5,486

$5,337

$5,329

$5,324

Originations*

17.52 million

15.36 million

14.40 million

11.93 million

*Note: Originations are viewed one quarter in arrears to account for reporting lag.

Information is a powerful thing. At TransUnion, we realize that. We are dedicated to finding innovative ways information can be used to help individuals make better and smarter decisions. We help uncover unique stories, trends and insights behind each data point, using historical information as well as alternative data sources. This allows a variety of markets and businesses to better manage risk and consumers to better manage their credit, personal information and identity. Today, TransUnion has a global presence in more than 30 countries and a leading presence in several international markets across North America, Africa, Latin America and Asia. Through the power of information, TransUnion is working to build stronger economies and families and safer communities worldwide.

*Projections; **Serious mortgage, auto loan and personal loan delinquencies are defined here as those with payments 60 or more days past. Serious credit card delinquencies are defined as those with payments 90 or more days past due.

While delinquency rates are expected to rise for most credit products, mortgage loans will continue their downward trend that has now seen delinquency rates drop every quarter since Q3 2013. Mortgage delinquency rates have declined consecutively for 23 of the last 26 quarters since peaking at 7.21% in Q1 2010.

“The mortgage market has improved dramatically, to a point where it has normalized on a delinquency basis. From an overall consumer credit standpoint, the mortgage marketplace also stands out from other loan types, with far more prime and above borrowers as a percentage of total accounts,” said Verma. “This improved risk distribution, coupled with rising home values, has led to a significant decline in mortgage delinquencies.”

It is important to highlight that the delinquency levels projected for all credit products in 2017, even those that are rising, will remain well below levels observed at the last recession. “These projected increases in delinquency are not surprising, nor are they yet a cause for concern,” said Verma. “Lenders are adjusting their underwriting strategies to maintain a good balance between expected losses, consumer credit access, customer utility and investor returns—and in the end, that balance is a benefit to all parties.”

TransUnion projects the credit card delinquency rate will continue to rise to close 2017 at 1.82%, its highest level since Q4 2011 and a 6.1% increase from the expected Q4 2016 delinquency rate.

In Q3 2016, subprime account volume grew 14.7%, the largest growth rate since TransUnion began tracking this metric in Q3 2009. However, subprime accounts comprised only about 10% (39.6 million) of the 398.5 million credit card accounts in the third quarter of 2016.

The credit card balance per consumer is projected to rise at year-end 2016 and throughout 2017. TransUnion expects the average balance to rise 1.87% from $5,337 in Q4 2015 to $5,437 in Q4 2016. Average balances are projected to reach $5,509 by the end of 2017. “A better employment picture and rising median household income are contributing to an anticipated increase in personal spending, and credit card balances are expected to benefit from those positive economic forces in 2017,” added Siegfried.

From a consumer standpoint, borrowers should be aware that credit card interest rates may rise as a result of prime rate increases. Consumers who carry a revolving balance should plan for their monthly payment amounts to go up. Despite the forecasted payment obligation increase, it is imperative for consumers to continue making at least their minimum due payments on time each month to avoid potential credit score impact, and regularly monitor and manage their credit. More information about consumer credit management can be found at https://www.transunion.com/debt-and-money-management.

The auto delinquency rate is projected to close 2017 at 1.40%, the highest level since 1.59% at year-end 2009. TransUnion expects the auto delinquency rate will reach 1.36% in Q4 2016, a 7.0% year-over-year increase from 1.27% in Q4 2015.

In Q3 2016 (the latest data available), there were 74.8 million auto loan accounts. Non-prime (VantageScore® 3.0 of 660 and below) accounts grew 7.5% to 25.1 million auto accounts in Q3 2016, up from 23.3 million in Q3 2015.

As the annual growth rate of new vehicle sales is expected to taper and interest rates are expected to rise, TransUnion expects auto sales to still grow, but at a lower rate than experienced in recent years. Growth in average auto balance per consumer is expected to slow to levels last observed in 2011. The average balance is projected to grow at a 2.4% rate between year-ends 2015 and 2016, compared to the 3.1% growth rate between Q4 2014 and Q4 2015 and 4.0% growth between Q4 2013 and Q4 2014. Average auto balances are expected to reach $18,435 in Q4 2016 and $18,840 in Q4 2017.

“Average auto balance growth began to slow at the beginning of 2016, and we expect this more moderate growth to continue through 2017 if wage growth continues,” said Laky.

TransUnion projects serious mortgage delinquency rates to decline slightly in 2017, while average debt levels are expected to rise. The 60-day+ mortgage delinquency rate is expected to decline from 2.21% in Q4 2016 to 2.11% in Q4 2017. Debt levels are expected to rise nearly $4,000 from $194,875 in Q4 2016 to $198,435 in Q4 2017.

A major driver of lower mortgage delinquency rates is the small composition of subprime borrowers who have a mortgage balance. Of the 66.9 million consumers with a mortgage balance in Q3 2016 (latest data available), only 8.5% were subprime borrowers. This is down from the 8.7% of subprime borrowers of the nearly 67.4 million consumers with a mortgage balance in Q3 2015, and well below the 15.5% seen in Q3 2009 (of a total of 73.0 million consumers with a mortgage balance).

“While increased interest rates will likely curtail refinancing activity materially and be a headwind for purchase mortgage affordability, we still see strong future purchase demand from prospective homebuyers,” said Mellman. “In fact, we believe with improved economic conditions we could see nearly three million first-time homebuyers in 2017, which will prove to be quite beneficial to the industry.”

60-Day+ Mortgage Delinquency Rate and Average Mortgage Debt per Borrower

Q4 2009

Q4 2010

Q4 2011

Q4 2012

Q4 2013

Q4 2014

Q4 2015

Q4 2016*

Q4 2017*

7.16%

6.65%

6.15%

5.38%

4.31%

3.40%

2.46%

2.21%

2.11%

$190,324

$186,488

$185,594

$184,753

$187,228

$187,311

$189,914

$194,875

$198,435

*Q4 2016 and Q4 2017 include projections

Inside the Personal Loan Forecast

TransUnion projects personal loan balances will rise to an average of nearly $8,000 to close 2017, while delinquency rates will remain low. The average personal loan balance is expected to grow 3.24% from $7,729 in Q4 2016 to $7,980 in Q4 2017, the highest level since TransUnion began tracking the metric in Q3 2009.

The personal loan delinquency rate is forecasted to increase year-over-year for the first time since Q2 2014, increasing to 3.66% at year-end 2016 and 3.72% at the conclusion of 2017. Delinquency levels will remain lower than the average fourth quarter reading of 4.18% (2009-2015).

Total personal loan account volume grew 13.2% from 14.29 million in Q3 2015 to 16.18 million in Q3 2016 (the latest data available). In Q3 2009, subprime accounts comprised 35.3% of all personal loan accounts. As personal loans have grown in popularity among prime consumers, subprime account share dropped to 29.7% in Q3 2012 and 27.6% by Q3 2016.

For more information about the 2017 TransUnion forecast and to register for a webinar providing detailed projections, please visit www.transunioninsights.com/IIR.

TransUnion’s Forecast

TransUnion’s forecasts are based on various economic assumptions, such as gross domestic product, home prices, personal disposable income and unemployment rates. The forecasts could change if there are unanticipated shocks to the economy, such as if home prices unexpectedly fall. Better-than-expected improvements in the economy, such as precipitous drops in unemployment, could also impact these forecasts.

About TransUnion (NYSE: TRU)Information is a powerful thing. At TransUnion, we realize that. We are dedicated to finding innovative ways information can be used to help individuals make better and smarter decisions. We help uncover unique stories, trends and insights behind each data point, using historical information as well as alternative data sources. This allows a variety of markets and businesses to better manage risk and consumers to better manage their credit, personal information and identity. Today, TransUnion has a global presence in more than 30 countries and a leading presence in several international markets across North America, Africa, Latin America and Asia. Through the power of information, TransUnion is working to build stronger economies and families and safer communities worldwide.

]]>mortgage,credit card,auto,personal loans,forecastWed, 14 Dec 2016 05:00:00 -0600Retailers, from Jewelers to Discount Stores, See 2x Spike in New Private Label Credit Cards during Holiday Seasonhttp://newsroom.transunion.com/retailers-from-jewelers-to-discount-stores-see-2x-spike-in-new-private-label-credit-cards-during-holiday-season/
http://newsroom.transunion.com/retailers-from-jewelers-to-discount-stores-see-2x-spike-in-new-private-label-credit-cards-during-holiday-season/TransUnion projects retail card debt to rise in 2017 on the heels of upcoming holidaysWhile it is common knowledge that more consumers open private label credit cards during the holiday season, TransUnion (NYSE: TRU) research has found that the number of new accounts often doubles for certain retailers in the month of December. The new analysis determined that online stores (2.0x greater than non-holidays), discount retailers (2.0x) and jewelry stores (1.8x) experience the biggest seasonal increases in card originations.

Retail card growth is greatest during the year-end holidays, and the number of consumers with such cards has consistently risen in recent years. The number of consumers with retail card credit jumped from 123.7 million in December 2014 to 124.8 million in December 2015. As of Q3 2016, the number of consumers with retail cards grew to 125.3 million and will likely grow substantially during this year’s holiday season. Department store cards make up the largest portion of a consumer’s retail card wallet, with about one-third of retail card accounts in that merchant category.

TransUnion also projects retail card balances will continue to increase at the end of 2016 and into 2017, and while the delinquency rate will remain low, it will experience an uptick from the year-end 2015 rate.

Retail Card Lift in Originations during the 2015 Holiday Season (December)

Retail Card Category

Lift compared to non-holiday season

Discount Stores

2.03x

Online

1.97x

Jewelry

1.77x

Department Stores

1.56x

Clothing

1.35x

Electronic

1.35x

Furniture

1.20x

Home Improvement

1.03x

The consumer makeup of the observed lift in new retail card accounts was spread across the entire credit risk spectrum. The largest lifts were seen in the subprime (VantageScore® 3.0 below 600) and near prime (VantageScore® 3.0 between 601 and 660) risk groups.

New Account Growth in Holidays Compared to Non-Holiday Average Growth

Risk Tier

Seasonal lift in 2013

Seasonal lift in 2014

Seasonal lift in 2015

Subprime

184%

189%

185%

Near prime

141%

166%

165%

Prime

125%

163%

156%

Prime plus

113%

164%

149%

Super prime

100%

155%

143%

Total

121%

164%

156%

With the recent increase in subprime and near prime card openings, TransUnion projects retail card delinquency will rise modestly from year-end 2015 (1.30%) to close both 2016 (1.40%) and 2017 (1.44%) higher. The average retail card balance (for consumers who carry a balance) is also projected to rise to $1,800 by the end of 2017 from $1,725 in Q4 2015.

Retail Card Delinquency and Balance

Q4 2013

Q4 2014

Q4 2015

Q4 2016 (Projection)

Q4 2017 (Projection)

Retail Card Delinquency Rate (90+ DPD)

1.21%

1.21%

1.30%

1.40%

1.44%

Retail Card Avg. Balance per Borrower

$1,661

$1,648

$1,725

$1,768

$1,801

“Typically, retail card delinquency rates are highest during the fourth quarter every year, as some consumers may face challenges after shopping or opening new cards,” said Verma. “In some cases, a consumer may forget he opened a new card and miss his first payment as a result. Consumers should be mindful of their new payment responsibilities and ensure they do not overextend themselves during the holiday shopping season.”

For more information on managing your credit obligations during the holidays, please visit TransUnion’s blog. Lenders interested in learning more about consumer payment patterns and how they can incorporate these insights into lending strategies are encouraged to visit TransUnion’s ScoreSavvy website.

More than 15 million consumers had a personal loan in the third quarter of 2016. The number of consumers with a personal loan grew by 1.5 million between Q3 2015 and Q3 2016. The report also found that personal loan balances surpassed $100 billion for the first time in Q3 2016, with $17 billion of balance growth occurring in the last year.

Despite surpassing $100 billion, total personal loan balances experienced the slowest third quarter growth rate since Q3 2013. In the third quarter of 2016, balances grew 20.9%, down from 24.9% in Q3 2015 and 25.5% in Q3 2014.

FinTech lender share of originated personal loans has more than tripled since 2013. FinTech originations reached 26% of all personal loans in Q2 2016, up from 8% in Q2 2013 and 16% in Q2 2014. Originations are viewed one quarter in arrears to ensure all accounts are reported and included in the data. In total, more than 3.57 million personal loans were originated in the second quarter, down 0.5% from 3.58 million in Q2 2015.

FinTech Lenders’ Share of the Personal Loan Market

Q2 2010

Q2 2011

Q2 2012

Q2 2013

Q2 2014

Q2 2015

Q2 2016

2%

3%

5%

8%

16%

27%

26%

In Q2 2016, near prime originations declined 4.7% and prime originations declined 2.7%, while both subprime and super prime originations grew by 3.2%, compared to Q2 2015. A prior TransUnion analysis found that FinTechs were outpacing traditional lenders in personal loans originated to near prime and prime borrowers. “The decline in near prime and prime originations reflects the challenges faced by some FinTech lenders,” added Laky. “Offsetting this, banks and credit unions are expanding in the super prime risk tier, while traditional finance companies continue to expand in subprime.”

Trends in the Unsecured Personal Loan Market

Unsecured Personal Loan Metric

Q3 2016

Q3 2015

Q3 2014

Q3 2013

Delinquency Rate (60+ DPD) Per Borrower

3.30%

3.32%

3.68%

3.63%

Average Debt Per Borrower

$7,745

$7,102

$6,501

$6,035

Prior Quarter Originations*

2.99 million

2.63 million

2.40 million

2.03 million

*Note: Originations are viewed one quarter in arrears to account for reporting lag.

Subprime and near prime mortgage originations, viewed one quarter in arrears, experienced the largest year-over-year growth from Q2 2015 to Q2 2016. Subprime originations reached nearly 64,000 in Q2 2016, the highest level since Q4 2009 and a 10.9% growth rate year over year. Near prime originations grew 5.7% to more than 262,000 in Q2 2016, the highest level since the Recession.

Overall, mortgage originations increased to 1.99 million in Q2 2016, a 3.7% rise from 1.92 million in Q2 2015.

Total mortgage balances grew 1.7%, from $8.25 billion in the third quarter of 2015 to $8.39 billion in Q3 2016. “The increase in mortgage balances was primarily driven by continued low interest rate availability supporting origination growth and higher home values leading to higher average new loan amounts,” added Mellman.

Trends in the Mortgage Market

Mortgage Lending Metric

Q3 2016

Q3 2015

Q3 2014

Q3 2013

Delinquency Rate (60+ DPD) per Borrower

2.29%

2.50%

3.51%

4.46%

Average Debt Per Borrower

$193,489

$189,428

$186,577

$185,809

Prior Quarter Originations*

1.99 million

1.92 million

1.39 million

2.23 million

*Note: Originations are viewed one quarter in arrears to account for reporting lag.

TransUnion Insights: Inside the Auto Loan Market

Total auto loan balances grew 9% to $1.1 trillion in Q3 2016 from $1.01 trillion in Q3 2015, according to TransUnion’s latest Industry Insights Report. Subprime balances experienced the largest increase, with 11.4% year-over-year growth. Despite this increase, subprime balances accounted for just $172 million of the $1.1 trillion in total balances in Q3 2016.

In the third quarter, 79.3 million consumers had an auto loan, up 6.2% from 74.7 million in Q3 2015. The average balance per consumer was $18,361, the highest level since Q3 2009. One year prior, the average auto loan balance was $17,946.

The report also found that auto loan delinquency, for consumers 60 days or more past due, reached 1.33% in Q3 2016, up from 1.19% in the third quarter of 2015. Auto originations, viewed one quarter in arrears, grew at the slowest annual pace since the Recession. Total originations were 7.27 million in Q2 2016, up slightly from 7.24 million in Q2 2015. Originations to non-prime consumers (VantageScore® 3.0 score of 660 and below) declined for the first time since Q3 2010.

“The second quarter of 2016 marked the first sign of a slowdown in non-prime originations, but the flat growth in total originations was in line with the expected plateauing of new vehicle sales,” added Laky.

Trends in the Auto Market

Auto Lending Metric

Q3 2016

Q3 2015

Q3 2014

Q3 2013

Delinquency Rate (60+ DPD) Per Borrower

1.33%

1.19%

1.20%

1.12%

Average Debt Per Borrower

$18,361

$17,946

$17,351

$16,699

Prior Quarter Originations*

7.27 million

7.24 million

6.81 million

6.48 million

*Note: Originations are viewed one quarter in arrears to account for reporting lag.

TransUnion Insights: Inside the Credit Card Market

The latest Industry Insights Report found that total credit card balances continued to rise across all credit risk tiers during Q3 2016. Balances increased to $683 billion for the quarter, up more than 7% compared to Q3 2015.

Credit card originations, viewed one quarter in arrears (to ensure all accounts are reported and included in the data) grew by 2.3 million (+15.3%) from 15.29 million in Q2 2015 to 17.62 million in Q2 2016. Growth was observed across all risk tiers, with both super prime (+15.3%) and non-prime (+16.0%) experiencing large gains.

Despite an increase in non-prime consumers participating in the credit card market, the serious delinquency rate (90 days or more past due) remained relatively low at 1.53% in Q3 2016. This was an increase of nine basis points from a Q3 2015 reading of 1.44%, though it remains below the average third quarter reading of 1.66% (2010-2015). “Low levels of card delinquencies, despite growing share of non-prime consumers, are primarily supported by the strong economic fundamentals,” added Siegfried.

Trends in the Credit Card Market

Credit Card Metric

Q3 2016

Q3 2015

Q3 2014

Q3 2013

Delinquency Rate (90+ DPD) Per Borrower

1.53%

1.44%

1.35%

1.48%

Average Debt Per Borrower

$5,323

$5,229

$5,251

$5,230

Originations*

17.62 million

15.29 million

13.66 million

11.13 million

*Note: Originations are viewed one quarter in arrears to account for reporting lag.

]]>mortgage,auto,credit card,consumer credit,IIRMon, 07 Nov 2016 05:00:00 -0600Fed Interest Rate Hike Could Cause ‘Payment Shock’ for 9 Million+ Consumers, But Majority of Population Would Go Unscathedhttp://newsroom.transunion.com/fed-interest-rate-hike-could-cause-payment-shock-for-9-million-consumers-but-majority-of-population-would-go-unscathed/
http://newsroom.transunion.com/fed-interest-rate-hike-could-cause-payment-shock-for-9-million-consumers-but-majority-of-population-would-go-unscathed/New research from TransUnion (NYSE:TRU) found that up to 92 million credit-active consumers would experience some type of monthly debt service payment increase if the Federal Reserve Board raises interest rates by 25 basis points (0.25%). However, the average monthly payment increase for these consumers would be a mere $6.45. Only about 10% of these impacted consumers – or 9.3 million – will likely not have the capacity to absorb an increased monthly payment obligation arising from a Fed rate hike.

TransUnion found that up to 68% of credit-active consumers would experience some level of payment shock – a change in monthly payment obligations – from an interest rate increase. Consumers who are susceptible to a payment shock have one or more variable-rate credit products in their wallets, such as a credit card, home equity line of credit, or certain forms of mortgages and personal loans. TransUnion also analyzed historical payment behavior across each consumer’s credit wallet to assess whether that consumer could afford an increased monthly payment of any size.

According to TransUnion’s study, while consumers across all risk tiers would experience an impact from the potential Fed interest rate hike, the impact varies. Consumers in the near prime risk tier (those with a VantageScore® 3.0 credit score between 601 and 660) had the largest share, with 82% of near prime consumers impacted from a potential rate increase.

TransUnion found that if the Federal Reserve increases interest rates by 25 basis points, 82% of impacted consumers would have a monthly payment shock of less than $10. The average change in monthly payment obligations would be just $6.45. “Most consumers have the financial capacity to absorb a seven dollar increase in their monthly payments, especially if they can plan ahead for the increased obligation,” added Verma.

Average “Payment Shock” to Consumers from Potential Interest Rate Hikes

Monthly Payment Shock Amount

Interest Rate Increase

$1-$10

$10-25

$25-50

$50 or more

25 bps rise

82%

13%

4%

1%

50 bps rise

67%

21%

8%

4%

100 bps rise

46%

26%

16%

12%

TransUnion used its CreditVision® aggregate excess payment (“AEP”) algorithm, which incorporates monthly payments from mortgages, credit cards and other debt obligations, to determine a consumer’s capacity to afford an increased monthly payment. With a 25 basis point rise in interest rates, 90% of exposed consumers can absorb their respective payment shocks. However, 9.3 million consumers do not appear to have the capacity to absorb a 25 basis point rise in interest rates.

“While it’s important to address the 9.3 million consumers who cannot absorb the payment shock, 90% of exposed consumers can afford their increased monthly payments,” said Verma. “However, if interest rates continue to rise progressively, more consumers might not be able to absorb the payment shock. Lenders should be mindful of which consumers in their portfolio are at risk from payment shocks, and use solutions such as AEP to identify these consumers and engage them appropriately.”

TransUnion’s study found that if interest rates rise by 100 basis points, an additional 2.5 million consumers might have a negative capacity to absorb their respective payment shocks. In total, 11.8 million consumers are estimated to be at risk of a negative capacity to absorb their increased payment obligations from a sudden 100 basis point rate increase.

“Fortunately, we believe it is highly unlikely the Fed will raise rates more than 25 basis points at any one time over the near term,” continued Verma. “This pace gives potentially impacted consumers an opportunity to adjust. In many cases, making minor changes to household spend would allow consumers to accommodate the payment shock.”

For more information on how the impact of a Fed interest rate hike might impact consumers, and how to use TransUnion’s CreditVision® aggregate excess payment algorithm to estimate the risk in your portfolio, visit http://www.transunioninsights.com/interestrates.

]]>credit card,mortgage,credit,interest rates,FedMon, 19 Sep 2016 05:00:00 -0500Credit Card Popularity Soars as 133 Million Consumers Now Possess at Least One Card with a Balancehttp://newsroom.transunion.com/credit-card-popularity-soars-as-133-million-consumers-now-possess-at-least-one-card-with-a-balance/
http://newsroom.transunion.com/credit-card-popularity-soars-as-133-million-consumers-now-possess-at-least-one-card-with-a-balance/Latest TransUnion report reveals 10 million new credit card users in last yearTen million new consumers have entered the credit card marketplace in the last year, pushing the overall total of Americans with a balance on at least one credit card to 133 million at the midpoint of 2016. TransUnion’s (NYSE: TRU) Q2 2016 Industry Insights Report, powered by PramaSM analytics, also found that total balances have increased to $662 billion as of Q2 2016, up 6% from Q2 2015.

The report indicated that credit card balance growth has been driven primarily by originations – both from existing customers and new entrants opening their first credit card. Younger millennials (consumers ages 20-29) comprised 52% of those opening their first credit card during Q2 2016.

The U.S. unemployment rate has dropped from 5.3 % in June 2015 to 4.9% in June 2016. The unemployment rate is now nearly half of what it was in June 2009 (9.5%) – the month concluding the “official” end to the Great Recession.

Trends in the Card Market

Credit Card Metric

Q2 2016

Q2 2015

Q2 2014

Q2 2013

Total General Purpose Card Balances

$662 billion

$623 billion

$601 billion

$580 billion

Subprime % of Total Balance

11.0%

10.3%

10.3%

10.5%

Delinquency Rate (90+ DPD) Per Borrower

1.29%

1.20%

1.31%

1.39%

Subprime Delinquency Rate

11.65%

11.12%

11.95%

12.69%

Average Debt Per Borrower

$5,247

$5,197

$5,228

$5,222

Subprime Debt Per Borrower

$5,063

$4,891

$5,080

$5,195

Prior Quarter Originations*

15.28 million

13.50 million

12.13 million

9.92 million

*Note: Originations are viewed one quarter in arrears to account for reporting lag.

As credit card usage rose in the second quarter, TransUnion observed how different credit risk tiers have impacted balance growth. In the last year, non-prime consumers (VantageScore® 3.0 score of 660 or below) have been building up their balances most, while those in the prime and above risk tiers (VantageScore® 3.0 score of 661 or above) are more actively deleveraging credit card balances.

Prime and above consumers made up 83% of consumers whose balances declined in the last year. Conversely, they represented 71% of consumers who built up their balances in the last year.

“Prime and above consumers represent nearly 79% of all credit card users, so their credit behavior is especially significant for the industry,” said Siegfried. “We have seen clear signs of deleveraging in this segment. At the same time, increasingly more non-prime consumers are getting access to card credit, usually at lower credit limits. Together, these trends are causing slower growth of balances relative to accounts,” said Siegfried.

The serious delinquency rate per borrower (90+ days delinquent) stands at 1.29% as of Q2 2016, up from a 1.20% reading in Q2 2015. “While delinquency has increased, we believe it is in line with the increased share of non-prime originations over the past year. As well, delinquency rates remain low relative to historical norms,” said Siegfried.

TransUnion Insights: Inside the Unsecured Personal Loan Market

Both total unsecured personal loan balances and average balances reached all-time highs during Q2 2016, though the serious delinquency rate reached its lowest post-recession level.

Total personal loan balances grew 26.2% to $96 billion in Q2 2016, up $20 billion from Q2 2015. Average debt per personal loan borrower rose 9.1% from $7,102 in Q2 2015 to $7,745 in Q2 2016.

In Q2 2016, 14.79 million consumers had a personal loan balance, an increase of 1.73 million consumers from 13.06 million in Q2 2015. Only 10.33 million consumers had a personal loan in Q2 2013, reflecting the increased growth and interest in this loan product in recent years. In addition, the unsecured personal loan delinquency rate remained steady in Q2 2016 at 3.30%, a slight decline from 3.32% in Q2 2015.

Personal loan originations (viewed one quarter in arrears to ensure all accounts are reported and included in the data) grew 13.6% from 2.63 million in Q1 2015 to 2.99 million in Q1 2016. Consumers in the prime or better risk tiers made up 36.4% of originations in Q1 2016. “Lenders are targeting more prime or better consumers, and the origination distribution is reflecting this shift,” added Laky.

Trends in the Unsecured Personal Loan Market

Unsecured Personal Loan Metric

Q2 2016

Q2 2015

Q2 2014

Q2 2013

Delinquency Rate (60+ DPD) Per Borrower

3.30%

3.32%

3.68%

3.63%

Average Debt Per Borrower

$7,745

$7,102

$6,501

$6,035

Prior Quarter Originations*

2.99 million

2.63 million

2.40 million

2.03 million

*Note: Originations are viewed one quarter in arrears to account for reporting lag.

TransUnion Insights: Inside the Auto Loan Market

More than five million additional consumers had an auto loan in Q2 2016 compared to Q1 2016, according to TransUnion’s latest Industry Insights Report. The number of consumers with an auto loan increased 7% from 72.87 million in Q2 2015 to 77.95 million in Q2 2016.

In Q2 2016, the average auto loan balance per consumer grew 2.7% and reached $18,177, the highest level post-recession. The average balance was up from $17,699 in Q2 2015.

Viewed one quarter in arrears to ensure all accounts are reported and included in the data, auto loan originations grew 6.4% year over year in the first quarter of 2016. Auto originations reached their highest post-recession level at 6.93 million in Q1 2016, up from 6.51 million in Q1 2015.

In Q2 2016, the auto delinquency rate increased to 1.11%, an 11-basis point rise from 1.00% in Q2 2015. “While delinquency rates rose in the second quarter, auto delinquency has been at all-time lows. We do not see a cause for concern from this slight increase,” added Laky.

Trends in the Auto Market

Auto Lending Metric

Q2 2016

Q2 2015

Q2 2014

Q2 2013

Delinquency Rate (60+ DPD) Per Borrower

1.11%

1.00%

1.09%

0.95%

Average Debt Per Borrower

$18,177

$17,699

$17,127

$16,424

Prior Quarter Originations*

6.93 million

6.51 million

6.23 million

5.75 million

*Note: Originations are viewed one quarter in arrears to account for reporting lag.

TransUnion Insights: Inside the Mortgage Market

In Q2 2016, the serious mortgage delinquency rate (60 or more days past due) declined to 2.30%, down more than 18% from 2.82% in Q2 2015.

Mortgage originations, viewed one quarter in arrears (to ensure all accounts are reported and included in the data), modestly dropped from 1.48 million in Q1 2015 to 1.46 million in Q1 2016. The decline snapped a five-quarter streak of continuous year-over-year growth.

TransUnion data show that only three states – North Dakota (+10.8%), Wyoming (+9.6%) and West Virginia (+0.5%) – experienced yearly delinquency increases.

Average mortgage debt per borrower continued to grow, rising 2.3% in the last year to $192,749. This marked the 5th consecutive quarter of mortgage debt growth and is largely due to the overall increase in home prices. The Case-Schiller Home Price Index rose from 178.92 to 188.29 within the last year (May 2015 to May 2016).

Trends in the Mortgage Market

Mortgage Lending Metric

Q2 2016

Q2 2015

Q2 2014

Q2 2013

Delinquency Rate (60+ DPD) per Borrower

2.30%

2.82%

4.02%

4.35%

Average Debt Per Borrower

$192,749

$188,504

$187,999

$185,687

Prior Quarter Originations*

1.46 million

1.48 million

1.03 million

2.04 million

*Note: Originations are viewed one quarter in arrears to account for reporting lag.

]]>IIR,mortgage,credit card,auto,unsecured loans,consumer lendingTue, 16 Aug 2016 05:00:00 -0500Millennials Central to Credit Union Growth, TransUnion Research Findshttp://newsroom.transunion.com/millennials-central-to-credit-union-growth-transunion-research-finds/
http://newsroom.transunion.com/millennials-central-to-credit-union-growth-transunion-research-finds/New TransUnion (NYSE:TRU) research has found that credit unions continue to grow at a faster rate than other financial institutions, and millennials are both a key driver and target market for sustained loan growth.

TransUnion found that in the first quarter of 2016, credit union membership grew at more than three times the rate of credit activity among consumers across other lender types, such as regional banks or finance companies. Credit unions experienced a year-over-year growth rate of 6.35% at the beginning of 2016, while industry credit active consumers grew at 1.86% in Q1 2016.

According to TransUnion data, 25% of credit union members in Q1 2016 were millennials. In Q1 2013, millennials made up only 20% of credit union membership. Millennial growth for non-credit unions grew at a slower pace, up to 25% in Q1 2016 from 23% in the first quarter of 2013. This is indicative of credit unions’ strategic focus on millennial growth.

The research findings were coupled with a survey of 96 credit union executives, which gathered insights on key industry issues. The information was released today at TransUnion’s annual credit union seminar in Las Vegas, which includes participants from leading credit unions across the country.

The survey found that 42% of credit union executives reported an overall year-over-year member growth rate higher than 5%. In particular, credit union memberships via mortgage origination have increased in recent years. In Q1 2016, credit unions had 3.8 million mortgage members, an increase of 4% from 3.67 million in Q1 2015. Compared to five years ago, credit union mortgage memberships have grown 13% from 3.29 million in the first quarter of 2011.

“The data show that credit union membership rates are growing much faster than the overall credit-active population,” said Verma. “Credit union executives are strategically focused on gaining membership growth through mortgage originations, as well as offering products such as credit cards to their existing member base.”

Credit Unions’ Opportunities: Auto Loans and Credit Cards

The survey also revealed that auto loans rank at the top for credit union executives in terms of loan growth, focus and opportunity over the next 12 months. This emphasis is a continuing one: according to TransUnion data, credit unions grew their auto membership 9.8% year-over-year from Q1 2015 to Q1 2016. In addition, in 2010 only 49 credit unions issued more than 10,000 auto loans. In 2015, 126 credit unions were issuing more than 10,000 auto loans.

Top Areas of Growth/Focus/Opportunity for Credit Union Executives in the Next 12 Months

Category

% Ranked #1 in 2016 Survey (2015 Percentages)

% Ranked Top 3 in 2016 Survey (2015 Percentages)

Auto Loans

41%(48%)

80%(81%)

Mortgage Loans

22%(26%)

61%(60%)

Share Draft Accounts

10% (3%)

26% (24%)

Credit Cards

6%(8%)

31% (46%)

Credit cards were in the top three areas of opportunity, but only 6% of credit union executives ranked credit cards as their top priority for 2016. The survey found that 69% of credit union executives said more than half of their members do not have a credit card with their credit union. This finding was corroborated with TransUnion research, which found that in Q4 2015, 44% of credit union members did not have a credit card with a credit union, but did have credit cards in their wallets.

“Our data show that 18 million credit union members do not have a credit union card in their wallet, which presents a sizable opportunity for growth,” said Verma. “Credit union executives have an opportunity to cross-sell products to these members who may have a mortgage, auto loan or other product with their credit union already. Most importantly, 75% of these members have a prime or better credit risk score, which means credit performance would most likely remain strong.”

For more information about how to gauge trends and make better-informed decisions, visit http://www.transunion.com/prama. The PramaSM Market Insights module provides detailed, depersonalized information on multiple types of credit at a state, regional and national level, and can be segmented by banks, credit unions, finance companies and other organizations.

]]>auto,credit card,mortgage,credit unions,millennialsTue, 02 Aug 2016 05:00:00 -0500TransUnion Study Finds Consumers Applying for a Mortgage Up to Three Times as Likely to Open New Credit Cards and Auto Loanshttp://newsroom.transunion.com/transunion-study-finds-consumers-applying-for-a-mortgage-up-to-three-times-as-likely--to-open-new-credit-cards-and-auto-loans/
http://newsroom.transunion.com/transunion-study-finds-consumers-applying-for-a-mortgage-up-to-three-times-as-likely--to-open-new-credit-cards-and-auto-loans/A new TransUnion (NYSE: TRU) study found that consumers applying for a new mortgage are on average two to three times more likely to open a new auto loan or credit card account over the next 12 months. In fact, many of these consumers open these accounts as soon as one month after their existing mortgage payoff.

The findings were released today at TransUnion’s Financial Services Summit in Chicago, attended by over 300 financial executives from across the globe. TransUnion’s study focused on mortgage applicants in the prime or better risk tiers* with an existing mortgage—those who are likely moving or refinancing.

The study found that prime or better mortgage applicants on average are over 50% as likely to open a new credit card over the next 12 months following a mortgage inquiry compared to the overall population. These same consumers can be up to three times as likely to open a new auto loan in that same 12 month period.

Likelihood of Prime or Better Consumers with a Mortgage Inquiry

to Open the Following Accounts Over the Next 12 Months

All Consumers

Consumers with a Mortgage Inquiry

% of Consumers Who Open a Credit Card

28%

43%

% of Consumers Who Open an Auto Loan

11%

22%

The study also found that average daily credit card originations for consumers who moved into new homes were 54% higher 30 days after paying off a mortgage compared to 30 days prior. Average daily auto originations were 84% higher in that same timeframe. Nearly identical credit card and auto origination trends were observed for consumers who refinanced an existing mortgage.

“Clearly consumers who are planning to move or refinance their mortgage wait until after that event to seek new credit—but once that new mortgage event occurs, their demand far outstrips the overall population. This information is particularly valuable for lenders who are seeking credit-active consumers with higher demand for new credit cards and auto loans; this population is much more likely to respond to new offers, making them an attractive segment that lenders can now identify,” added Becker.

Credit Card Spend Surprisingly Rises Prior to Mortgage Closing

According to TransUnion’s research, for existing mortgage borrowers who move or refinance, 71% of all mortgage inquiries occur between 30 and 90 days prior to existing mortgage payoff and new mortgage origination. In this timeframe, consumers who are preparing to originate a new mortgage change their credit card spending and balance behaviors.

Consumers significantly increase credit card spend—at a rate of two to three times—and begin building balances in the months prior to mortgage payoff and new mortgage originations, not after. Contrary to popular belief, the study also found that consumers increase credit card spending—up to three times higher than levels six months earlier—in the month prior to paying off their existing mortgages.

Monthly Credit Card Spending Trends:

How Much Consumers Spend 1 Month Prior to Payoff Compared to 6 Months Prior to Payoff

Average Increase in Monthly Card Spend

Those Consumers Who Are Moving

Those Consumers Who are Refinancing

General Purpose Credit Cards

1.1 - 1.8X

1.7 – 3.0X

Retail / Private Label Cards

1.4 – 1.7X

1.6 – 2.4X

“Card spending increases are even greater for mortgage borrowers who refinance. These consumers may be anticipating lower mortgage payments, and take advantage of the greater available cash flow by increasing card spending in the months before their refinancing. They may benefit from increased credit limits on their cards. Lenders can take advantage of these insights by identifying existing cardholders with mortgage inquiries for proactive credit line increases,” added Wise.

TransUnion’s study included 16.7 million consumers who paid-off their mortgages and moved with new mortgages or refinanced their existing mortgages between Q1 2013 and Q2 2015. The study observed consumers in the prime or better risk tiers, who make up the large majority of the mortgage-seeking population. In fact, 89% of consumers who took on a new mortgage to move into a new home belonged to these risk tiers. Approximately 85% of consumers who refinanced their mortgage loans belonged to the prime or better risk tiers.

]]>Information+for+Good,credit card,mortgage,autoThu, 26 May 2016 05:00:00 -0500TransUnion: Subprime Borrowers Help Push Canadian Debt Levels Up 3%http://newsroom.transunion.com/transunion-subprime-borrowers-help-push-canadian-debt-levels-up-3/
http://newsroom.transunion.com/transunion-subprime-borrowers-help-push-canadian-debt-levels-up-3/TransUnion’s (TRU: NYSE) latest Canada Industry Insights Report found that the average Canadian’s non-mortgage debt level rose to $21,348 in Q1 2016, up 2.7% from Q1 2015. The increase was particularly visible outside of the oil patch, with Ontario and Quebec seeing the greatest rises. Debt levels rose for most major credit products, with lines of credit being the only outlier, experiencing a 0.54% average balance decline.

Average Consumer Non-Mortgage Debt Levels

Q1 2015

Q1 2016

YoY Change

All Products

$20,785

$21,348

2.71%

Auto Loans

$19,132

$19,538

2.12%

Credit Cards

$3,697

$3,764

1.80%

Installment Loans

$22,504

$23,591

4.83%

Lines of Credit

$29,816

$29,656

-0.54%

“In credit cards, for example, the national average balance only increased by 1.8% from last year, but the subprime card growth rate was 5.7%. In fact, prime or better segments actually reduced their balances. Although subprime consumers do not make up the bulk of Canadian credit users, we are going to keep a close eye on this trend,” added Wang.

Average Credit Card Balance per Consumer for Each Risk Tier†

Q1 2015

Q1 2016

YoY Change

Subprime

$6,245

$6,601

5.7%

Near Prime

$6,100

$6,260

2.6%

Prime

$6,134

$5,847

-4.7%

Prime Plus

$3,513

$3,372

-4.0%

Super Prime

$1,596

$1,573

-1.5%

Total

$3,697

$3,764

1.8%

Regional Differences on the Delinquency Front

While national serious delinquency rates (the ratio of all accounts 90 or more days past due for all non-mortgage loan types) increased approximately 3% from 2.45% in Q1 2015 to 2.52% in Q1 2016, some of the most populous provinces such as Ontario and British Columbia experienced declines. The largest delinquency rate increases occurred in provinces most impacted by the oil slump—Alberta and Saskatchewan. This regional difference is also consistently observed across different loan types.

90+ Day Delinquency Rates for All Non-Mortgage Loans

Q1 2015

Q1 2016

Yearly PCT. Change

Canada

2.45%

2.52%

2.98%

Alberta

2.50%

2.80%

11.92%

British Columbia

2.47%

2.43%

-1.42%

Ontario

2.59%

2.57%

-0.80%

Quebec

1.89%

2.01%

6.29%

Saskatchewan

2.88%

3.04%

5.56%

“When it comes to loan default rates, we are looking at two distinct groups: oil-sector provinces and the rest of the country,” said Wang. “We continue to see material delinquency increases in the oil provinces, and we suspect that it will continue over the next few quarters.”

“While financial institutions are understandably inclined to focus their attention and resources—particularly in the risk management arena—on their exposure to the oil patch, it’s important to note that the robustness of consumer spending and credit performance outside the oil provinces shouldn’t be ignored,” added Wang. “Lenders will likely benefit from the generally healthy and well-functioning consumer credit marketplace in the rest of Canada, particularly in those areas where the stable trend in credit usage and the sheer size of the consumer market present good opportunities for growth.”

Credit Card Delinquencies Returned to 2014 Levels

Canadian credit card delinquency rates rose more than 14% between Q1 2015 (1.81%) and Q1 2016 (2.06%). Despite the rise, credit card delinquency rates now stand at “normal” levels last observed in 2014.

“The credit card delinquency picture is interesting for a number of reasons. The first quarter reading in 2015 was the lowest level TransUnion had observed since at least 2009. However Canada was technically in a recession in the first half of 2015,” said Wang. “How can this be? The explanation is that defaults are a lagging phenomenon. The seeming improvement in early 2015 was the delayed manifestation of the recovering economy in 2014. However, as the oil slump began disproportionately impacting certain provinces in 2015, the national credit card delinquency rate finally began rising a few quarters later, leading to a big year-over-year jump. This phenomenon proves the importance of using leading indicators when lenders monitor and manage risk.”

More information about the Q1 2016 TransUnion Canada Industry Insights Report can be found here.

About TransUnion Canada Industry Insights Report

TransUnion’s Canada Industry Insights Report is an in-depth, full population-based solution that provides statistical information every quarter from TransUnion’s national consumer credit database, aggregated across virtually every active credit file on record. Each file contains hundreds of credit variables that illustrate consumer credit usage and performance. By leveraging the Industry Insights Report, institutions across a variety of industries can analyze market dynamics over an entire business cycle, helping to understand consumer behaviour over time and across different geographic locations throughout Canada. Businesses can access more details about and subscribe to the Industry Insights Report at http://www.transunioninsights.ca/IIR/.

]]>Canada,IIR,credit card,mortgage,autoWed, 18 May 2016 04:00:00 -0500TransUnion: U.S. Delinquency Rates Remain Low to Open 2016, Though Energy State Rises Beginning to Have Greater Impact on Nationhttp://newsroom.transunion.com/transunion-us-delinquency-rates-remain-low-to-open-2016-though-energy-state-rises-beginning-to-have-greater-impact-on-nation/
http://newsroom.transunion.com/transunion-us-delinquency-rates-remain-low-to-open-2016-though-energy-state-rises-beginning-to-have-greater-impact-on-nation/TransUnion’s (NYSE: TRU) Q1 2016 Industry Insights Report found that the oil slump continued to impact consumer credit performance in those states with economies more reliant on the energy sector. The report, powered by PramaSM analytics, indicated that serious delinquency levels for auto loans and credit cards continued to increase in energy-sector states such as North Dakota, Oklahoma and Texas.

Driven in part by these state-level increases, the national average for both serious credit card and auto loan delinquencies rose to levels not observed during the first quarter in at least three years. TransUnion analyzes year-over-year metrics to account for seasonality.

Serious delinquency on auto loans (60 or more days past due) hit 1.12% in Q1 2016, the first time it has topped 1% in the first quarter since 2011. Serious credit card delinquency rates (90 or more days past due) increased to 1.47% in Q1 2016, the highest level observed for the first quarter of the year since a 1.51% reading in Q1 2013. Credit card delinquency rates had remained flat at 1.37% during the first quarters of 2014 and 2015.

Energy States: Tale of Two Years –

Yearly Serious Delinquency Percentage Increase/Decrease

Credit Product

Years

U.S.

North Dakota

Oklahoma

Texas

West Virginia

Serious Auto Loan Delinquency % Change

Q1 2014 – Q1 2015

-0.2%

-3.0%

-21.4%

-0.5%

-2.6%

Q1 2015 – Q1 2016

13.4%

67.3%

18.8%

21.4%

26.1%

Serious Credit Card Delinquency % Change

Q1 2014 – Q1 2015

0.2%

5.5%

5.0%

0.3%

4.9%

Q1 2015 – Q1 2016

6.9%

28.3%

14.3%

14.3%

19.8%

These results, along with the findings discussed below, were reported in the latest TransUnion Industry Insights Report, a quarterly overview summarizing data, trends and perspectives on the U.S. consumer lending industry. The report is based on anonymized credit data from virtually every credit-active consumer in the United States.

TransUnion Insights: Inside the Credit Card Market

The latest Industry Insights Report found that the total balance for credit cards reached nearly $644 billion in the first quarter of 2016, an increase of 6.4% and the highest year-over-year growth observed in more than six years. The total balance was up from $605 billion in Q1 2015.

Serious credit card delinquency reached 1.47% in Q1 2016, a 6.9% increase from 1.37% in Q1 2015. Delinquency rates, though, remain below the average first quarter delinquency rate of 1.52% since Q1 2011 and are more than a full percentage point below those observed in the 2009 timeframe.

Credit card originations, viewed one quarter in arrears (to ensure all accounts are reported and included in the data), grew by 2.1 million from 14.42 million in Q4 2014 to 16.52 million in Q4 2015. Growth was observed across all risk tiers, with the slowest year-over-year growth rates observed in the prime risk tier (14.3%) and super prime risk tier (10.6%). Prime consumers also experienced the slowest balance growth in Q1, at 4.5% year-over-year growth.

“The slow growth in balances and originations for the prime risk tier may in part be an impact of consumer substitution with unsecured personal loans,” added Siegfried. TransUnion research has found that FinTech lenders have developed a niche within the prime and near prime risk tiers.

Trends in the Credit Card Market

Credit Card Metric

Q1 2016

Q1 2015

Q1 2014

Q1 2013

Delinquency Rate (90+ DPD) Per Borrower

1.47%

1.37%

1.37%

1.51%

Average Debt Per Borrower

$5,193

$5,142

$5,168

$5,207

Originations*

16.52 million

14.42 million

13.46 million

11.58 million

*Note: Originations are viewed one quarter in arrears, reflecting data for the prior quarter (Q4 2015).

TransUnion Insights: Inside the Unsecured Personal Loan Market

Total unsecured personal loan balances reached $92 billion in Q1 2016 and have more than doubled since Q1 2012, when total balances stood at $45 billion. Unsecured loans are offered by banks, credit unions, and finance companies, including FinTech lenders (online and marketplace).

The average unsecured personal loan balance was $7,555 in Q1 2016, a 9.6% increase from $6,892 in Q1 2015. In the first quarter of 2016, the serious delinquency rate for unsecured personal loans (60 or more days past due) remained steady at 3.53%, unchanged from Q1 2015.

Viewed one quarter in arrears (to ensure all accounts are reported and included in the data), unsecured personal loan originations exceeded 4 million for the first time in Q4 2015. Originations grew 16.4% to 4.01 million from 3.44 million in Q4 2014. At year-end 2015, 35% of originations were to subprime borrowers and 32.5% of new loans were originated to consumers in the near prime risk tier.

Trends in the Unsecured Personal Loan Market

Unsecured Personal Loan Metric

Q1 2016

Q1 2015

Q1 2014

Q1 2013

Delinquency Rate (60+ DPD) Per Borrower

3.53%

3.53%

3.69%

3.75%

Average Debt Per Borrower

$7,555

$6,892

$6,343

$5,920

Prior Quarter Originations*

4.01 million

3.44 million

3.14 million

2.73 million

*Note: Originations are viewed one quarter in arrears,to ensure all accounts are reported and included in the data.

TransUnion Insights: Inside the Auto Loan Market

In Q1 2016, 76.37 million consumers had an auto loan, an increase of 5 million from the first quarter of 2015. The number of consumers with an auto loan grew 7.1% from 71.29 million in Q1 2015.

Viewed one quarter in arrears (to ensure all accounts are reported and included in the data), auto loan originations grew 5.4% year-over-year to 6.51 million in Q4 2015, up from 6.17 million in Q4 2014. The average new account balance (reported one quarter in arrears) reached $20,469 in Q4 2015, its highest level since the Recession. The average new account balance increased 2.9% from $19,890 at year-end 2014.

Trends in the Auto Market

Auto Lending Metric

Q1 2016

Q1 2015

Q1 2014

Q1 2013

Delinquency Rate (60+ DPD) Per Borrower

1.12%

0.99%

0.99%

0.94%

Average Debt Per Borrower

$18,058

$17,508

$16,865

$16,195

Prior Quarter Originations*

6.51 million

6.17 million

5.70 million

5.30 million

*Note: Originations are viewed one quarter in arrears,to ensure all accounts are reported and included in the data.

TransUnion Insights: Inside the Mortgage Market

In Q1 2016, serious mortgage delinquency (60 or more days past due) declined to 2.25%, down nearly 24% from 2.95% in the first quarter of 2015. The delinquency rate has declined for 10 straight quarters, and is now less than one-third of the 6.94% peak recorded in Q1 2010.

Approximately 67 million consumers had a mortgage in Q1 2016, down from 67.4 million in Q1 2015. Mortgage originations, viewed one quarter in arrears (to ensure all accounts are reported and included in the data), increased 10.6% to 1.60 million in Q4 2015, up from 1.45 million in Q4 2014.

The average new account balance, reported one quarter in arrears, grew 6.7% to $220,050 in Q4 2015 from $206,197 in Q4 2014. However, it remained slightly below the recent peak of $222,475 observed in Q1 2015.

Trends in the Mortgage Market

Mortgage Lending Metric

Q1 2016

Q1 2015

Q1 2014

Q1 2013

Delinquency Rate (60+ DPD) per Borrower

2.25%

2.95%

3.59%

4.43%

Average Debt Per Borrower

$191,529

$187,175

$186,836

$182,840

Prior Quarter Originations*

1.60 million

1.45 million

1.39 million

2.33 million

*Note: Originations are viewed one quarter in arrears, to ensure all accounts are reported and included in the data.

]]>IIR,mortgage,credit card,credit,auto,auto loans,unsecured loansWed, 11 May 2016 05:00:00 -0500TransUnion: Energy Price Declines and Growing Subprime Population May Be Impacting Some Credit Marketshttp://newsroom.transunion.com/transunion-energy-price-declines-and-growing-subprime-population--may-be-impacting-some-credit-markets/
http://newsroom.transunion.com/transunion-energy-price-declines-and-growing-subprime-population--may-be-impacting-some-credit-markets/TransUnion’s (NYSE: TRU) Q4 2015 Industry Insights Report found that consumer credit markets continued to perform well to close 2015, but energy price declines and a growing subprime borrower pool began to show a mild impact in some regions of the country.

As more consumers—and more non-prime consumers—are gaining auto loan and credit card access, delinquency levels for these credit products have only risen slightly and remain at relatively low levels. Both mortgages and personal loans experienced yearly drops in their delinquency levels, with mortgages dropping nearly 30% in the last year.

TransUnion data show that at the conclusion of 2015 there were 1.26 million more subprime borrowers with credit card accounts showing a balance, and 1.21 million additional subprime consumers with auto loan accounts, compared to the end of 2014. The share of subprime accounts compared to other risk tiers also rose slightly in the last year.

States in which energy plays a major role in the economy also showed an impact in the delinquency rates for the first time in the fourth quarter. In 2015, both credit card and auto loan delinquency rates experienced double-digit increases in energy-rich states such as Louisiana, Oklahoma, North Dakota, Texas and West Virginia. Mortgage delinquency rate declines were also not as rapid in these states compared to the U.S. overall.

These results, along with the findings discussed below, were reported in the latest TransUnion Industry Insights Report, a quarterly overview summarizing data, trends and perspectives on the U.S. consumer lending industry. The report is based on anonymized credit data from virtually every credit-active consumer in the United States.

TransUnion Insights: Inside the Auto Loan Market

In Q4 2015, 75.6 million consumers had an auto loan, up 7.8% from 70.1 million in Q4 2014. This is the largest year-over-year auto loan account growth observed by TransUnion. New auto loan and lease originations, viewed one quarter in arrears (to ensure all accounts are reported and included in the data), exceeded 7.5 million for the first time in Q3 2015. Originations increased 8% from 7.0 million in Q3 2014.

Average auto loan debt per borrower grew to $17,999 by year-end 2015, a 3.1% increase from $17,453 in Q4 2014.The auto loan delinquency rate (the rate of borrowers 60 days or more past due on their auto loans) increased 6.4% from 1.16% in Q4 2014 to 1.24% in Q4 2015. As of Q4 2015, the auto delinquency rate reached its highest level since Q4 2010, when auto delinquency hit 1.22%.

“As lenders’ portfolios rebalance to accommodate the growth in non-prime lending over the past few years, we expect a mild uptick in delinquency,” said Laky. “We remain in a low delinquency environment, but have observed pockets of pain in states with large exposure to the energy industry. Lenders should be mindful of different economic impacts and employment levels in various regions of the U.S.”

Trends in the Auto Market

Auto Lending Metric

Q4 2015

Q4 2014

Q4 2013

Q4 2012

Delinquency Rate (60+ DPD) Per Borrower

1.24%

1.16%

1.14%

1.09%

Average Debt Per Borrower

$17,999

$17,453

$16,771

$16,064

Originations*

7.54 million

6.99 Million

6.64 Million

5.99 Million

*Note: Originations are viewed one quarter in arrears, reflecting data for the prior quarter (Q3).

TransUnion Insights: Inside the Credit Card Market

The latest Industry Insights Report found that the credit card delinquency rate (the rate of borrowers 90 days or more delinquent on their general purpose credit cards) increased 6.9% from 1.47% in Q4 2014 to 1.58% in Q4 2015. The credit card delinquency rate reached its highest level since 1.62% in Q4 2012.

The average credit card debt per borrower remained relatively steady at $5,337, a 0.2% increase from $5,327 in Q4 2014. The number of consumers with access to a credit card reached a historically high level at year-end 2015. More than 5.8 million additional consumers had access to a credit card in Q4 2015 (163.16 million total) compared to Q4 2014 (157.36 million).

Credit card originations, viewed one quarter in arrears (to ensure all accounts are reported and included in the data), increased 6.5% from 14.39 million in Q3 2014 to 15.33 million in Q3 2015. “Originations continue to be a key driver of growth for the credit card industry as balances have remained steady during the year-end holiday shopping season for the past several years,” added Siegfried.

Trends in the Credit Card Market

Credit Card Metric

Q4 2015

Q4 2014

Q4 2013

Q4 2012

Delinquency Rate (90+ DPD) Per Borrower

1.58%

1.47%

1.48%

1.62%

Average Debt Per Borrower

$5,337

$5,327

$5,330

$5,383

Originations*

15.33 Million

14.39 Million

11.97 Million

10.77 Million

*Note: Originations are viewed one quarter in arrears, reflecting data for the prior quarter (Q3).

TransUnion Insights: Inside the Mortgage Market

The mortgage delinquency rate (the rate of borrowers 60 days or more delinquent on their mortgages) declined 28% from 3.29% in Q4 2014 to 2.37% in Q4 2015. This yearly percentage decline doubled the 14% decrease observed between Q4 2013 and Q4 2014. It also marked the largest yearly drop TransUnion has observed for the fourth quarter since the mortgage delinquency rate began to recover in 2010.

While delinquencies improved, mortgage debt per borrower increased 1.4% from $187,139 in Q4 2014 to $189,707 in Q4 2015. This marks the highest debt level per borrower observed since the Great Recession.

As the number of accounts has declined, TransUnion has observed strong recovery on the origination front. Viewed one quarter in arrears (to ensure all accounts are reported and included in the data), TransUnion found that mortgage originations (by loan count) in Q3 2015 grew more than 21% year-over-year. All risk tiers – super prime to subprime – were within two percentage points of the annual growth rate. “For the first time since the ‘refi’ boom, we believe some origination activity may be attributed to ‘last chance’ refinancing to lock in a low rate before the widely-anticipated Fed Funds Rate increase in December. This sustained high level of activity is an indicator of a broadly recovering housing market,” added Mellman.

Trends in the Mortgage Market

Mortgage Lending Metric

Q4 2015

Q4 2014

Q4 2013

Q4 2012

Delinquency Rate (60+ DPD) per Borrower

2.37%

3.29%

3.84%

5.06%

Average Debt Per Borrower

$189,707

$187,139

$185,496

$183,339

Originations*

1.88 Million

1.55 Million

1.95 Million

2.29 Million

*Note: Originations are viewed one quarter in arrears, reflecting data for the prior quarter (Q3).

TransUnion Insights: Inside the Consumer Lending Market

The latest Industry Insights Report found that the consumer lending delinquency rate (the rate of borrowers 60 days or more delinquent on their personal loans) dropped 2% from 3.95% in Q4 2014 to 3.87% at the end of 2015. Personal loans include both unsecured installment loans and non-auto, non-mortgage secured installment loans, such as recreational vehicles and boats.

Total balances for personal loans reached $270 billion in Q4 2015, a 12.2% increase from $241 billion in Q4 2014. The average personal loan balance per consumer increased 2.4% from $13,327 in Q4 2014 to $13,649 in Q4 2015.

In Q4 2015, there were 26.81 million borrowers with a personal loan, a 7.9% increase from 24.85 million in Q4 2014. Originations, viewed one quarter in arrears (to ensure all accounts are reported and included in the data), grew 8.1% from 5.92 million in Q3 2014 to 6.39 million in Q3 2015. 2.30 million of these loans were to subprime borrowers, a 7.3% increase from 2.14 million in Q3 2014.

“Personal loans remain a popular product for non-prime consumers. However, we are observing origination growth across all the risk tiers, including prime and super prime consumers,” added Laky.

Trends in the Consumer Lending Market

Personal Loan Metric

Q4 2015

Q4 2014

Q4 2013

Q4 2012

Delinquency Rate (60+ DPD) Per Borrower

3.87%

3.95%

4.00%

3.94%

Average Debt Per Borrower

$13,649

$13,327

$13,411

$13,753

Originations*

6.40 million

5.92 Million

5.61 Million

5.05 Million

*Note: Originations are viewed one quarter in arrears, reflecting data for the prior quarter (Q3).

]]>TransUnion,IIR,mortgage,credit card,auto,consumer lendingWed, 17 Feb 2016 05:00:00 -0600Majority of Canadians Use Their Favoured Credit Card for Most of Holiday Purchaseshttp://newsroom.transunion.com/majority-of-canadians-use-their-favoured-credit-card-for-most-of-holiday-purchases/
http://newsroom.transunion.com/majority-of-canadians-use-their-favoured-credit-card-for-most-of-holiday-purchases/A new TransUnion analysis found that the majority of Canadian consumers show loyalty to one credit card even as their spend increases during the holiday season.

TransUnion found that more than 22 million Canadian consumers have general purpose credit cards, and they average about 1.8 active cards per person. The analysis found that more than half of Canadians who own multiple cards usually put most of their spending on one card. The analysis also forecasts that more than half of these consumers will continue that behaviour in the next 12 months.

Proportion of purchases put on favourite card†…

In the next 12 months, how many of them may continue or increase usage of their favourite card

100% concentration

(Extremely loyal)

52%

80% - 99% concentration

(Very loyal)

61%

60% - 79% concentration (Loyal)

53%

† Consumers who have two or more credit cards

TransUnion’s study also looked into whether holiday shopping levels stay consistent year after year. Holiday shopping is defined here as spending during the months of November and December that utilized a general purpose credit card. According to TransUnion’s database, Canadians’ median holiday spending increased significantly between 2013 and 2014. The top 20% of credit card users also increased their median spending in 2014, albeit at a slower pace.

“Our study found that the rank-ordering of spending remains unchanged. Simply put, if you were a high spender during the 2014 holiday season, chances are you will be a high spender again this holiday season,” said Wang. “Our third quarter MarketTrends report showed that credit card balances are already at a two-year high. The current oil slump may have reduced the disposable income available to consumers in the oil patch, but at the same time, the two rate cuts this year have made debt more affordable. In any economic environment, our advice to consumers is always to remember to spend within their means.”

]]>Canada,credit cardThu, 10 Dec 2015 06:39:24 -0600TransUnion’s 2016 Forecast Expects Consumer Credit Markets to Complete Recovery http://newsroom.transunion.com/transunions-2016-forecast-expects-consumer-credit-markets-to-complete-recovery/
http://newsroom.transunion.com/transunions-2016-forecast-expects-consumer-credit-markets-to-complete-recovery/TransUnion’s 2016 mortgage and credit cardforecastspredict that the consumer lending market will have fully recovered by the end of next year from both the mortgage crisis and the ensuing Great Recession that concluded more than six years ago.

TransUnion forecasts the national mortgage loan serious delinquency rate (the ratio of borrowers 60 or more days past due) will decline from 2.50% at the end of 2015 to 2.06% at the conclusion of 2016. Consumer level mortgage delinquency rates peaked in Q1 2010 at 6.94% and have been declining nearly every quarter since.

Credit card serious delinquency rates (the ratio of bankcard borrowers 90 days or more delinquent on one or more of their credit cards) are expected to conclude 2016 at 1.46%. This would mark the fourth consecutive year of delinquency rates just below 1.5%, a nearly 50% decline in delinquency rates from the end of 2009.

“Both the mortgage and credit card markets are performing extremely well, with increased consumer participation and continued low delinquency rates. Millions of borrowers have gained access to credit card loans in just the past few years. And despite the fact that more consumers—and more non-prime consumers—are entering the housing market, delinquency levels have remained in check and balances are growing. This points to responsible lending practices and a consumer base that is clearly in a better position to make payments on their loans.”

Inside the Mortgage Forecast

TransUnion’s 2.06% projection for the year-end 2016 mortgage delinquency rate would place this metric in the range traditionally observed prior to the mortgage crisis. The mortgage delinquency rate has dropped on a yearly basis since reaching near-peak levels at the end of 2009.

“We have observed that a ‘normal’ delinquency rate fell between 1 ½ and 2 percent in the past, and our forecast puts the nation back at this level,” said Steve Chaouki, executive vice president and head of TransUnion’s financial services business unit. “Newer vintage mortgage loans have been performing at this level for the last few years, but a combination of factors such as the funneling of bad mortgage loans through the foreclosure process, an improvement in the employment picture and an uptick in housing prices were needed to get back to normal.”

Mortgage debt per borrower has also slowly gained in recent years, which is partly due to a rebound in housing prices. Debt levels are expected to experience a $9,000+ gain by the end of next year from the year-end low observed in 2012.

Average Mortgage Debt per Borrower (Q4 2015 and Q4 2016 are projections)

Q4 2009

Q4 2010

Q4 2011

Q4 2012

Q4 2013

Q4 2014

Q4 2015

Q4 2016

$189,561

$186,057

$185,218

$183,339

$185,496

$187,139

$189,917

$192,512

“This is a clear indicator that housing prices are recovering and consumers are gaining access to more mortgage loans,” said Chaouki. “Fannie Mae’s recent announcement that it would use trended data in the assessment of mortgage applicants could also very well boost mortgage originations in the second half of 2016.”

A previous TransUnion analysis found that with the use of trended data, the percentage of consumers in the super prime risk tier would increase from 12% of the population to 21%. Super prime consumers generally have the greatest access to new loans at the lowest pricing.

TransUnion data show that the number of mortgage accounts has remained relatively low for much of the last three years, though growth has been observed during the last two years. As of Q3 2015 (latest available data), there are 52.6 million mortgage accounts, approximately 7 million fewer than in Q3 2009 (59.6 million).

“We are a long way from returning to pre-recession levels in terms of mortgage accounts, but changing consumer preferences for housing also may play a role in this slow recovery,” said Chaouki. “If the economy continues to perform well, we believe the net number of mortgages will increase over the next year.”

Inside the Credit Card Forecast

The serious credit card delinquency rate is expected to remain at around 1.5%, the year-end levels observed for the last four years. As usual, seasonal movements will occur throughout the year, but consumers are expected to maintain their strong payment performance.

The credit card industry has been performing well even as it has extended credit to millions of additional consumers during the last few years. As of Q3 2015 there were 368.8 million credit card accounts—up from the 354.8 million figure from the same quarter last year. In Q3 2009, there were only 337.8 million credit card accounts.

Further increases in credit card account volume could occur in 2016 as more financial institutions utilize new, sophisticated alternative data solutions such as CreditVision Link, which has been shown to score more than 60 million traditional “no-hits” and unscorable records.

“As delinquency rates for credit cards remain low, lenders are making card credit increasingly more available to consumers across the risk spectrum,” said Becker. “Those consumers are generally accepting those card offers, using that card credit and managing the debt responsibly. In short, these are the hallmarks of a credit market that is functioning extremely well.”

Credit card debt per borrower is expected to remain essentially flat in 2016, moving from an estimated $5,281 in Q4 2015 to $5,262 in Q4 2016. These numbers are well below levels observed just after the Great Recession ($6,051 in Q4 2009).

Average Credit Card Debt per Borrower (Q4 2015 and Q4 2016 are projections)

Q4 2009

Q4 2010

Q4 2011

Q4 2012

Q4 2013

Q4 2014

Q4 2015

Q4 2016

$6,051

$5,620

$5,491

$5,383

$5,330

$5,327

$5,281

$5,262

While debt levels have dropped more than 10% since 2009, average credit lines have not changed much in the last six years, moving from $21,942 in Q3 2009 to $21,613 in Q3 2015. The biggest changes to credit lines have occurred with subprime consumers (those with a VantageScore® 3.0 credit score lower than 601). In Q3 2009, subprime consumers had $6,993 in available credit; this has now dropped to $5,136 as of Q3 2015.

“Credit card lenders manage their portfolio risks by limiting credit access for higher risk borrowers,” said Becker. “Much of this risk management occurred between 2009 and 2012, but we’ve seen stabilization on this front for the last three years. As the economy continues to improve and credit card performance remains strong, it’s quite possible consumers in the subprime risk group could see more credit opportunities in the near future.”

TransUnion’s forecasts are based on various economic assumptions, such as gross domestic product, home prices, personal disposable income and unemployment rates. The forecasts would change if there were unanticipated shocks to the economy, such as if home prices unexpectedly fall. Better-than-expected improvements in the economy, such as precipitous drops in unemployment, could also impact these forecasts.

TransUnion’s Industry Insights Report

The data provided are gathered from TransUnion's proprietary Industry Insights Report (IIR), a quarterly overview summarizing data, trends and perspectives on the U.S. consumer lending industry. The report is based on anonymized credit data from virtually every credit-active consumer in the United States. Please visit http://www.transunioninsights.com/IIR for more charts and details about TransUnion’s Q3 2015 Industry Insights Report.

About TransUnion (NYSE:TRU)Information is a powerful thing. At TransUnion, we realize that. We are dedicated to finding innovative ways information can be used to help individuals make better and smarter decisions. We help uncover unique stories, trends and insights behind each data point, using historical information as well as alternative data sources. This allows a variety of markets and businesses to better manage risk and consumers to better manage their credit, personal information and identity. Today, TransUnion has a global presence in more than 30 countries and a leading presence in several international markets across North America, Africa, Latin America and Asia. Through the power of information, TransUnion is working to build stronger economies and families and safer communities worldwide.

]]>Information+for+Good,credit card,mortgage,CreditVisionWed, 09 Dec 2015 06:00:00 -0600Credit Card Loyalty Remains Strong During Holiday Season Even with Increase in Spendinghttp://newsroom.transunion.com/credit-card-loyalty-remains-strong-during-holiday-season--even-with-increase-in-spending/
http://newsroom.transunion.com/credit-card-loyalty-remains-strong-during-holiday-season--even-with-increase-in-spending/Consumers Use One Credit Card for Nearly 80% of Holiday SpendA new TransUnion (NYSE:TRU) analysis has found that credit card loyalty remains intact despite enticing offers and higher spend during the holiday shopping season. The analysis found that, although consumers possess an average of five general purpose and private label credit cards, most use only one of them for 78% of their spending during the holiday season.

“This finding may be advantageous for both lenders and consumers,” said Nidhi Verma, director of research and consulting for TransUnion. “For example, credit card issuers can use new marketing segmentation tools that utilize spend and balance data to seek out certain consumers, knowing that they will remain loyal even as their card spend increases. Further, consumers could benefit by receiving more attractive credit card offers tailored to their usage preferences.”

The pattern TransUnion reported remained relatively unchanged from the rest of the year, which averaged 79% spent using one card. Consumers in the super prime risk tier (those with a VantageScore® 3.0 credit score 780 or higher) are the most loyal to their preferred card, with 82% of their credit card spend on one card in December. Subprime consumers (those with a VantageScore® 3.0 credit score lower than 601) are also loyal to generally one card throughout the year, with spend on that one card—referred to as the “top of wallet” card—declining minimally from 70% the first 11 months of the year to 68% in December.

Customer loyalty to one credit card persists during the holidays despite an overall growth in spend and balances during November and December.

Consumer Credit Card Spend By Month

2014

January – October Average

November

December

Percent of Annual Credit Card Spend

8.1%

9.1%

10.2%

TransUnion’s analysis found that as of Q3 2015, 161.7 million consumers had access to an open general purpose bankcard, and those consumers carried an average of 2.6 open cards in their wallets. About 113.6 million consumers had access to a private label credit card and carried an average 2.5 open private label cards in their wallets. The volume of consumers with credit cards of either kind has continued to increase, with a 5% rise estimated between the end of 2014 and 2015.

“Consumers are increasingly gaining access to credit, and although most consumers have several cards in their wallets, many of these revolving credit lines often go unused,” added Verma. “Hence, determining which credit card may be most valued by a consumer is a critical question for lenders.”

On the debt front, aggregate revolving credit balances increased by $13.5 billion between Q3 2014 and Q3 2015. Non-revolving debt also rose by $249.5 billion over the same period. At the consumer level, however, average revolving balances decreased by 3.9% in the last year to $10,931 in Q3 2015. This decline at the consumer level was driven in part by increased access to credit by non-prime consumers, who generally have lower credit limits. Non-revolving debt per consumer also decreased by 0.3% over the year, ending at an average of $113,973 per consumer in Q3 2015.

Consumer Delinquency and Debt Changes in the Last Year

Loan Type

Q3 2015 Serious Delinquency Rate

Yearly Pct. Change

Q3 2015

Debt Per Borrower

Yearly Pct. Change

Mortgage

2.40%

(-28.5%)

$189,039

1.5%

Auto

1.16%

0.0%

$17,942

3.4%

Credit Card

1.43%

6.7%

$5,232

(-0.3%)

These results, along with the findings discussed below, were reported in the latest TransUnion Industry Insights Report, a quarterly overview summarizing data, trends and perspectives on the U.S. consumer lending industry. The report is based on anonymized credit data from virtually every credit-active consumer in the United States.

Auto loan balances for the subprime risk tier (those consumers with a VantageScore® 3.0 credit score lower than 601) remain the smallest segment with 15.3%, or $154 billion, of the total balance. However, this is the highest share of auto balance observed for the subprime risk tier since Q1 2011. Consumers in the prime or better risk tiers (those with a VantageScore® 3.0 credit score higher than 661) represent $670 billion of the $1 trillion in balances.

The average balance across all auto loan accounts was $14,515 in Q3 2015, a 2.7% increase year-over-year, and the slowest pace of average balance growth since Q4 2011. The average subprime auto loan balance increased 4.2% from $13,328 in Q3 2014 to $13,890 in Q3 2015, the lowest growth rate since early 2012.

As balances increase, auto loan delinquencies (the rate of borrowers 60 days or more delinquent on their auto loans) continue to remain flat – remaining at 1.16% in both Q3 2014 and Q3 2015.

Nearly 75 million consumers have an open auto account, an increase of 5 million since Q3 2014 (69.5 million). The number of consumers with access to an auto loan grew 2 million quarter over quarter from 72.5 million in Q2 2015.

“More consumers have access to auto loans, yet delinquencies remain low as they continue to responsibly manage their payments,” said Laky. “Consumers are taking on more and bigger auto loans in today’s low-rate environment, but we see no cause for concern as delinquencies remain steady.”

Viewed one quarter in arrears (to ensure all accounts are reported and included in the data), new auto loan originations exceeded 7 million for the first time in Q2 2015. Up 13.5% from Q1 2015 and 6.4% from Q2 2014, originations reached 7.3 million this past quarter.

Along with origination growth, the average new auto loan balance grew to $20,016 in Q2 2015. The average balance increased $567 from the average balance in Q2 2014 of $19,449. New subprime auto loan balances increased 3.7% year-over-year from $16,781 in Q2 2014 to $17,357 in Q2 2015.

TransUnion Insights: Inside the Credit Card Market

TransUnion’s report found that credit card originations, viewed one quarter in arrears (to ensure all accounts are reported and included), reached the highest level since Q3 2009. Total originations reached 15.2 million, a 12.2% increase from 13.5 million in Q2 2015. “Credit card originations are increasing at a faster pace in the last year, indicating that consumers have an appetite for credit,” said Paul Siegfried, senior vice president and credit card business leader for TransUnion.

The credit card delinquency rate (the rate of borrowers 90 days or more delinquent on their general purpose credit cards) rose nearly 7% from 1.34% to 1.43% in Q3 2015. The delinquency rate, though, remains in a similar range to what has been observed the last few years and is nearly half of the Q3 2009 reading of 2.76%.

Total bankcard balances in Q3 2015 grew 4.7%, reaching $637 billion. Balances were nearly $30 billion lower in Q3 2014, when the total balance was $608 million. On a quarterly basis, total balances grew 2.4%, up from $622 million in the prior quarter.

The number of consumers with credit cards reached 130.8 million in Q3 2015, a 4.3% increase from 125.4 million consumers in the prior year same quarter.

Consumers in the non-prime (those consumers with a VantageScore® 3.0 credit score of 660 or below) risk tier contributed to the growth in credit card access, with 33 million more consumers gaining access to credit in Q3 2015. Non-prime consumers’ access to credit cards grew in the last year by 25.3%.

While the average new credit line grew for all risk tiers in Q2 2015 (also viewed one quarter in arrears to ensure all accounts are reported and included in the data), subprime consumers experienced an increase in average new credit line for the first time since Q2 2014. New subprime credit lines increased 0.7% to $995 in Q2 2015.

New super prime credit lines experienced the largest growth in the second quarter at 8.4%. The average new credit line for super prime consumers reached $10,576 in Q2 2015, up from $9,759 in Q2 2014. On a quarterly basis, the average new credit line for these consumers remained steady from $10,566 in Q1 2015.

TransUnion Insights: Inside the Mortgage Market

The latest Industry Insights Report found that the mortgage delinquency rate (the rate of borrowers 60 days or more delinquent on their mortgages) declined nearly 30% from 3.36% in Q3 2014 to 2.40% in Q3 2015. The delinquency rate has now declined 65% from its Q1 2010 peak of 6.94%.

All age groups dropped in delinquency roughly equally, in the 27% to 30% range. Both millennials and the 60+ age groups are the least risky consumer groups, with delinquency rates of 1.62% and 1.77%, respectively.

Every state across the board experienced yearly declines in their mortgage delinquency rate. Of note, Florida’s mortgage delinquency rate dropped the most of any state in the last year from 6.42% in Q3 2014 to 3.75% in Q3 2015.

The top 10 MSAs by population all showed a dramatic decrease in year-over-year delinquency rates, averaging a 33% drop, with Miami and San Francisco declining more than 40%.

Viewed one quarter in arrears (to ensure all accounts are reported and included in the data), TransUnion found that mortgage originations (by loan count) in Q2 2015 maintained last quarter’s robust growth. At 2.01 million, mortgage originations have increased nearly 40% in the last year. As a comparison point, since a post financial crisis origination low in Q2 2011, the nation has averaged a quarterly origination rate of 1.80 million.

The trend of super prime and prime plus consumers leading the pack in mortgage origination growth continues, with 50% and 40% year-over-year increases observed. However, prime, near prime and subprime populations also showed meaningful growth at approximately 30% each.

“This is now the third straight quarter where we’ve not only seen year-over-year mortgage origination growth, but also significant increases in the higher risk populations of near prime and subprime—hinting at a loosening of credit and/or a change in the mix of borrowers seeking mortgages,” said Mellman.

]]>IIR,credit card,auto,mortgage,Information+for+Good,financial services,auto loanMon, 16 Nov 2015 05:00:00 -0600New TransUnion Analysis Finds Enriched Data Boosts Recovered Dollars in Collectionshttp://newsroom.transunion.com/new-transunion-analysis-finds-enriched-data-boosts-recovered-dollars-in-collections/
http://newsroom.transunion.com/new-transunion-analysis-finds-enriched-data-boosts-recovered-dollars-in-collections/The CreditVision® recovery model is the first scoring model to incorporate an expanded view of consumer tradeline informationA new TransUnion (NYSE:TRU) study found that using an expanded view of credit data allowed collection agencies and debt buyers to increase their recovered dollars by up to 9%. The study also showed, compared to a traditional recovery score, TransUnion’s CreditVision® recovery model yielded an average increase of 3% more payers.

“As the economy continues to recover, collection agencies and debt buyers need a broader and fresher data set that is representative of recent economic conditions,” said Peter Ghiselli, vice president in TransUnion’s specialized risk group. “This new recovery model is built on current consumer credit data to incorporate the evolving credit landscape, allowing collectors to see a substantial improvement in the number of payers and dollars recovered.”

To determine the impact of expanded credit data, which includes balance, payment and credit limit, TransUnion analyzed more than 40 million accounts from 15 collection agencies and debt buyers. The analysis included a variety of debt types, including credit card, medical, student loan, telecom and utility debts, and defined “recovery” as $50 or more collected within 12 months. The new recovery model was built using, where available, up to 30 months of historical information on each loan account, actual payment amounts and an increased number of prior addresses.

The study found that the CreditVision recovery model had a significant impact on the top 10% of collections accounts in the credit card market. Compared to traditional recovery models, the new recovery score helped collection agencies and debt buyers recover on average 13% more dollars and receive up to an 11% increase in number of payers from the top tier. While traditional models allowed collectors to recover up to 91% of dollars for the top half of debtors, the new model delivers an average of 96% dollar recovery rate.

With up to 30 months of historical information on each loan account and actual payment amounts, the new TransUnion recovery model is the first of its kind to add enhanced credit data from CreditVision. The expanded view of data helps collections agencies identify behaviors to determine payment patterns. The model also allows collectors to access data and set account strategies prior to contacting a debtor.

]]>Collections,credit card,debt,CreditVisionTue, 01 Sep 2015 05:00:00 -0500TransUnion's Ken Chaplin Discusses Millennials and Credit with Bankratehttp://newsroom.transunion.com/transunions-ken-chaplin-discusses-millennials-and-credit-with-bankrate/
http://newsroom.transunion.com/transunions-ken-chaplin-discusses-millennials-and-credit-with-bankrate/Millennials (those consumers born between 1980 and mid-2000's) account for one-third of the nation's total population. Ken Chaplin, senior vice president at TransUnion, joined Bankrate in August for a podcast about how millennials are using and managing credit.

During the discussion, Ken addressed how millennials approach their finances: "As a group, millennials are much more aware of where they stand financially, due primarily to technology and the advent of folks having access to credit scores, reports and management tools like never before. So, I think in aggregate, millennials are much more aware of credit and where they stand in that spectrum."

]]>TUI,credit card,credit,student loans,millennialsThu, 27 Aug 2015 16:05:22 -0500TransUnion: Credit Card Delinquency Rates Remain Low; Subprime Borrowers Represent Larger Share of New Loanshttp://newsroom.transunion.com/transunion--credit-card-delinquency-rates-remain-low-subprime-borrowers-represent-larger-share-of-new-loans/
http://newsroom.transunion.com/transunion--credit-card-delinquency-rates-remain-low-subprime-borrowers-represent-larger-share-of-new-loans/More credit cards are being offered to subprime consumers, but delinquency rates remain low, according to the latest TransUnion (NYSE:TRU) Industry Insights Report. The credit card delinquency rate (the ratio of borrowers 90 days or more delinquent on their general purpose credit cards) remained steady at 1.19% in Q2 2015. The delinquency rate was relatively unchanged from 1.17% in Q2 2014.

Hand in hand with new account growth in the subprime credit tier (those consumers with a VantageScore® 3.0 credit score lower than 601) originations, the average new account credit line for subprime consumers continued to drop in Q2 2015. The average new credit line for this tier declined to $923 in Q2 2015, the lowest level since Q2 2012, when average new account lines reached $896.

“Subprime consumers continue to gain access to credit, but lenders have scaled back the average new credit line for this group,” said Paul Siegfried, senior vice president and credit card business leader for TransUnion. “Distribution of originations across risk tiers has remained relatively steady in the past year, indicating that lenders are deliberate and approaching subprime originations cautiously.”

Up from 154.2 million in Q2 2014, the number of consumers with credit cards increased by 6.8 million year over year. Credit card issuers reported 160.17 million consumers with credit cards in Q2 2015 to TransUnion. “We are seeing that new accounts and users of credit are a key growth driver for the first half of 2015,” said Siegfried.

The number of consumers under age 30 with a credit card balance rose to 20.73 million in Q2 2015, an 8.6% increase from 19.09 million in Q2 2014. The delinquency rate for the youngest consumer group remained above the national average in Q2 2015 at 1.80%. Average balances for the under 30 group rose slightly, up $19 from $2,135 in Q2 2014 to $2,154 in Q2 2015.

“From Q2 2014 to Q2 2015, 1.6 million more consumers under age 30 had a credit card balance, which demonstrates this group’s appetite for credit,” said Siegfried. “The under 30 age group had the largest increase of any age group, yet average balances have remained steady year over year. We’re observing consistent credit management skills from this group.”

Thirteen states experienced a decline in their delinquency rates, with Alaska (down 10.1% from 1.19% in Q2 2014 to 1.07% in Q2 2015), Washington (down 4.1% from 0.87% in Q2 2014 to 0.83% in Q2 2015) and New Hampshire (down 1.02% in Q2 2014 to 0.99% in Q2 2015) experiencing the largest declines. Average credit card balance per consumer declined in 39 states, while three states remained unchanged. North Dakota (up 0.9% from $4,283 in Q2 2014 to $4,322 in Q2 2015) and Hawaii (up 0.7% from $5,539 in Q2 2014 to $5,579 in Q2 2015) experienced the largest average balance increases.

This information is reported by TransUnion and is part of its ongoing series of quarterly analyses of credit-active U.S. consumers and how they are managing credit related to mortgages, credit cards and auto loans.

Viewed one quarter in arrears (to ensure the large majority of accounts are included in the data), new account originations increased 11.2% from 11.7 million in Q1 2014 to 13.1 million in Q1 2015. New account originations were largely driven by the subprime risk tier, which accounted for 18% of all account originations, up from 14.7% in Q1 2014.

Average credit card balances per borrower declined slightly from $5,234 in Q2 2014 to $5,199 in Q2 2015. The average balance increased 1.1% quarter-over-quarter, up from $5,142 in Q1 2015. Super Prime consumers (those consumers with a VantageScore® 3.0 credit score 780 or higher) experienced the largest average balance growth, up 1.4% from $2,316 in Q2 2014 to $2,349 in Q2 2015.

CHICAGO, IL--(Marketwired - Dec 10, 2014) - TransUnion released its annual forecast today for two key consumer credit statistics -- mortgage and credit card delinquency rates. The national mortgage loan delinquency rate (the ratio of borrowers 60 or more days past due) is projected to decline to 3.12% to close 2014, and reach 2.51% by the end of 2015. That would end next year at the lowest level since hitting 2.61% in Q3 2007, prior to the Great Recession. As of Q3 2014, the mortgage delinquency rate stands at 3.36%.

National mortgage delinquency peaked at 6.93% in Q1 2010. Since that peak, the delinquency rate has dropped almost every quarter, with minor bumps occurring in Q3 and Q4 2011.

"We expect the national mortgage loan delinquency rate to continue its decline throughout 2015, marking four consecutive years of quarterly decreases," said Steve Chaouki, head of financial services for TransUnion. "We anticipate interest rates to remain relatively low next year and unemployment rates to continue their decline, both of which should help fuel home sales and improve consumers' ability to pay. Foreclosures are also expected to continue to funnel through the legal system in 2015, which will reduce delinquencies that have been lingering for some time. All of these factors will contribute to a further decline in mortgage delinquencies."

"While we project that delinquencies will approach prerecession levels, it should be noted that they will likely remain above the historic norm of 1 1/2 - 2%; mortgage delinquency was rising even before the official 'start' of the recession. It is also important to note that the housing environment is far different now than it was when we last observed rates this low," continued Chaouki. "Regulatory requirements and scrutiny, recent home value appreciation and consumers' prioritization of payments have all changed the landscape of consumer mortgage lending."

One illustration of those differences is in the percentage of mortgage loans held by subprime consumers. The last time mortgage delinquency rates were near 2.5% was in Q3 2007, when there were 62.4 million mortgage accounts on the books. Of those accounts, 10.3% (6.4 million) belonged to subprime borrowers. Seven years later, there are nearly 10 million fewer mortgage accounts active overall; and of the 52.8 million mortgage accounts on record in Q3 2014, only 7.4% (3.9 million) are loans to subprime borrowers.

"Even though several years have passed since the mortgage crisis, mortgage lending remains relatively tight," said Chaouki. "In the last year alone (Q3 2013 to Q3 2014), we have recorded nearly one half million fewer subprime mortgage accounts than in the prior 12 months, even as the total number of mortgage accounts overall grew by about 500,000."

At the state level, mortgage loan delinquency rates peaked generally in late 2009 and early 2010, in line with the national average. TransUnion is projecting 33 states to have delinquency rates lower than 2.5% by the end of next year. And while the United States overall is expected to see a nearly 20% decline next year in its mortgage delinquency rate, 12 states are projected to have 30% or greater decreases. All but three states will either experience a decline or see their mortgage delinquency rates remain relatively flat over the course of 2015.

On an absolute percentage point basis, TransUnion forecasts the largest mortgage delinquency rate declines will happen in Nevada (down from 4.65% to 2.97%), Georgia (down from 3.31% to 1.92%), Maryland (down from 4.17% to 2.83%) and Illinois (down from 3.37% to 2.17%). Increases in delinquency are expected in only three states: Idaho (up from 2.16% to 2.44%), Massachusetts (up from 3.18% to 3.26%) and North Dakota (up from 0.97% to 1.02%).

Credit Cards

The serious credit card delinquency rate (the ratio of bankcard borrowers 90 days or more delinquent on one or more of their credit cards) is expected to remain well below average historical levels in 2015. TransUnion's forecast calls for card delinquency to end 2014 at 1.52%, and remain flat at 1.53% by Q4 2015, with seasonal movement throughout the year. In contrast, between 2007 and 2013 the credit card delinquency rate averaged 2.25% in the fourth quarter.

Credit card debt per borrower is expected to rise slightly from $5,363 in Q4 2014 to $5,396 in Q4 2015, but still remain well under the 2007-2013 Q4 average of $5,722. Though the majority of states will experience a rise in credit card debt per borrower, most increases will be below 1%.

"The credit card industry has been performing exceptionally well for several years, and we do not expect this to change in 2015," said Ezra Becker, vice president of research and consulting at TransUnion. "While we have seen an uptick in subprime lending, the increases have been relatively small and to date have not had a material impact on either delinquency or debt levels."

As of Q3 2014, there were 29.2 million subprime card accounts, constituting 8.3% of all credit card accounts. This is an increase from one year ago (Q3 2013), when there were 26.7 million cards held by subprime borrowers, constituting 8.0% of all credit card accounts. Contrasted to the same period in 2007, these are relatively low numbers -- seven years ago, there were nearly 20 million more credit card accounts (48.7 million) held by subprime consumers, constituting 12.6% of all credit card accounts.

"Our data show that subprime borrowers have lower delinquencies on their credit cards than historic norms, and much of this is likely due to the increased value today's consumer is placing on credit cards," said Becker. "We have previously presented studies that show the increased importance of credit cards for many households as a means of getting by during tough times -- our research on the reversal of the payment hierarchy demonstrated clearly that many consumers were prioritizing card payments ahead of mortgage payments for several years post-recession. That dynamic is winding down as home values improve and unemployment abates, but card lenders are still feeling the benefits of it."

While subprime credit card delinquency rates were as high as 18.0% in Q3 2007, they dropped to 13.4% in Q3 2013 and currently stand at 12.8% as of Q3 2014. As card lenders continue to ease their underwriting standards, TransUnion expects card delinquency rates to align with historical norms, both in the subprime segment and overall.

Twenty-four states are expected to see an increase in their credit card delinquency rates during 2015, with the largest rises in Mississippi (up from 2.50% to 2.81%), Arkansas (up from 1.95% to 2.07%) and Utah (up from 1.11% to 1.20%). The largest declines are projected in Massachusetts (down from 1.20% to 1.10%), Wyoming (down from 1.11% to 1.03%) and Maine (down from 1.35% to 1.27%).

TransUnion's forecasts are based on various economic assumptions, such as gross state product, consumer sentiment, unemployment rates and real estate values. The forecasts would change if there were unanticipated shocks to the economy, such as if home prices unexpectedly fall. Better-than-expected improvements in the economy, such as precipitous drops in unemployment, could also impact these forecasts.

Note: Q4 2014 also is a projected number as the quarter has not yet ended.

TransUnion's Industry Insights Report

The data provided are gathered from TransUnion's proprietary Industry Insights Report (IIR), a quarterly overview summarizing data, trends and perspectives on the U.S. consumer lending industry. The report is based on anonymized credit data from virtually every credit-active consumer in the United States.

About TransUnion As a global leader in information and risk management, TransUnion creates advantages for millions of people around the world by gathering, analyzing and delivering information. For businesses, TransUnion helps improve efficiency, manage risk, reduce costs and increase revenue by delivering high quality data, and integrating advanced analytics and enhanced decision-making capabilities. For consumers, TransUnion provides the tools, resources and education to help manage their credit health and achieve their financial goals. Through these and other efforts, TransUnion is working to build stronger economies worldwide. Founded in 1968 and headquartered in Chicago, TransUnion reaches businesses and consumers in 33 countries around the world. www.transunion.com/business

CHICAGO, IL--(Marketwired - Nov 20, 2014) - The latest TransUnion Industry Insights Report found that total outstanding credit card balances increased by 4.3% in Q3 2014 from Q3 2013. This signals the second consecutive quarter of significant annual growth and it constitutes the highest growth rate observed since Q4 2008.

Interestingly, this increase in total balances occurred while the average credit card debt per borrower remained unchanged, increasing slightly from $5,239 in Q3 2013 to $5,249 in Q3 2014.

The combination of these findings indicates that the current momentum in total balances may be driven by new entrants to the credit card market. In fact, the number of consumers with access to a credit card increased by almost 6 million from Q3 2013 to Q3 2014, to nearly 156 million.

At the same time, the national credit card delinquency rate (the ratio of borrowers 90 days or more delinquent on their general purpose credit cards) remained relatively steady in the last year, declining from 1.36% in Q3 2013 to 1.34% in Q3 2014. The TransUnion report showed a quarterly increase in both the credit card delinquency rate and average credit card debt per consumer, which are believed to be reflective of seasonal effects.

The data provided are gathered from TransUnion's proprietary Industry Insights Report, a quarterly overview summarizing data, trends and perspectives on the U.S. consumer lending industry. The report is based on anonymized credit data from virtually every credit-active consumer in the United States.

"Seeing the highest rate of growth in credit card balances in the last six years in such a low delinquency environment is an encouraging sign for the card industry," said Toni Guitart, director of research and consulting in TransUnion's financial services business unit. "The combination of a stable delinquency environment across consumer segments and significant amounts of new entrants in the card market, point to a positive momentum dynamic that has not been experienced since before the Great Recession."

90+ Day Credit Card Delinquency Rates for Various Age Groups

Age Range

Q3 2013

Q3 2014

PCT. Change

Under 30

2.03%

2.06%

1.3%

30-39

1.97%

1.94%

-1.3%

40-49

1.72%

1.69%

-2.1%

50-59

1.20%

1.17%

-2.8%

60+

0.68%

0.66%

-1.6%

The outlook from some of the nation's largest metropolitan areas appears even brighter. For the most part, delinquency levels declined on a yearly basis at a greater clip than the national average. Leading the declines were Boston (-11.6%), Miami (-7.9%) and San Francisco (-7.0%). Only two major markets experienced minimal rises in their delinquency rates - Chicago (+0.6%) and New York (+0.2%).

Only 18 states experienced yearly increases in their delinquency rates led by Mississippi (9.6%) and West Virginia (8.5%). Massachusetts had the largest yearly decline (-11.6%) followed by Florida (-5.3%), California (-5.2%) and Idaho (-5.2%).

TransUnion reported 354.79 million credit card accounts as of Q3 2014, up from 333.72 million in Q3 2013. Viewed one quarter in arrears (to ensure all accounts are included in the data), new account originations increased 22.15% to 13.51 million in Q2 2014, up from 11.06 million in Q2 2013.

TransUnion's latest credit card report also found that the non-prime population (those consumers with a VantageScore® 3.0 credit score lower than 661) represents a larger portion of all new credit card loans at 36.0% in Q2 2014, up from 30.5% in the same period last year. Five years ago (Q2 2009), the non-prime population represented 26.7% of all credit card originations for that quarter. TransUnion's report also noted that the subprime population increased from 13.8% in Q2 2013 to 17.1% in Q2 2014.

"While more non-prime and subprime consumers are receiving credit cards, we have not seen a major impact on the overall delinquency rate," said Guitart. "We will continue to monitor this situation as more subprime lending in the credit card space is generally followed by an uptick in delinquency rates."

This information is reported by TransUnion and is part of its ongoing series of quarterly analyses of credit-active U.S. consumers and how they are managing credit related to mortgages, credit cards and auto loans. To subscribe to TransUnion news releases, please click here.

Q3 2014 Credit Card Statistics - Consumer-Level Delinquency Rates

Quarter over Quarter

Q2 2014

Q3 2014

Pct. Change

USA

1.17%

1.34%

14.5%

Year over Year

Q3 2013

Q3 2014

Pct. Change

USA

1.36%

1.34%

(1.2%)

Credit Card Consumer Delinquency Rates for Select States

Q3 2014

California

1.26%

Florida

1.56%

Illinois

1.20%

New York

1.42%

Texas

1.49%

Largest Year-over-Year Declines

Q3 2013

Q3 2014

Pct. Change

Massachusetts

1.31%

1.16%

(11.6%)

Florida

1.65%

1.56%

(5.3%)

California

1.32%

1.26%

(5.2%)

Idaho

1.12%

1.06%

(5.2%)

Largest Year-over-Year Increases

Q3 2013

Q3 2014

Pct. Change

Mississippi

1.90%

2.09%

9.6%

West Virginia

1.45%

1.57%

8.5%

Arkansas

1.62%

1.70%

5.0%

Q3 2014 Credit Card Statistics - Credit Card Debt Per Borrower

Quarter over Quarter

Q2 2014

Q3 2014

Pct. Change

USA

$5,234

$5,249

0.3%

Year over Year

Q3 2013

Q3 2014

Pct. Change

USA

$5,239

$5,249

0.2%

Credit Card Debt per Borrower for Select States

Q3 2014

California

$5,293

Florida

$5,242

Illinois

$5,320

New York

$5,445

Texas

$5,482

Largest Year-over-Year Declines

Q3 2013

Q3 2014

Pct. Change

Arizona

$5,308

$5,259

(0.9%)

Colorado

$5,712

$5,664

(0.8%)

California

$5,334

$5,293

(0.8%)

Largest Year-over-Year Increases

Q3 2013

Q3 2014

Pct. Change

North Dakota

$4,258

$4,330

1.7%

Vermont

$4,878

$4,955

1.6%

West Virginia

$4,617

$4,689

1.6%

About TransUnion As a global leader in credit and information management, TransUnion creates advantages for millions of people around the world by gathering, analyzing and delivering information. For businesses, TransUnion helps improve efficiency, manage risk, reduce costs and increase revenue by delivering comprehensive data and advanced analytics and decisioning. For consumers, TransUnion provides the tools, resources and education to help manage their credit health and achieve their financial goals. Through these and other efforts, TransUnion is working to build stronger economies worldwide. Founded in 1968 and headquartered in Chicago, TransUnion reaches businesses and consumers in 33 countries around the world on five continents. www.transunion.com/business